Centrica plc announced today that its North American subsidiary, Direct Energy, has agreed to acquire the New York-based energy retailer Gateway Energy Services Corporation (Gateway) for $90 million (£55 million) in cash (including $13 million (£8 million) of tax assets) plus additional working capital.
Gateway has more than 275,000 gas and electricity customer accounts, located mainly in New York State, New Jersey and Pennsylvania. This acquisition will further strengthen Direct Energy's position as a leading competitive energy retailer in North America, increasing its residential and small business customer relationships to more than 800,000 in the US Northeast.
The deal builds on Direct Energy's strong organic expansion in the US Northeast. Over the last year, Direct Energy has begun serving residential customers in nine new electricity markets and four new natural gas markets in the states of Maryland, Pennsylvania, Ohio, and Illinois. These include the urban centres of Pittsburgh, Philadelphia, Baltimore, Cincinnati and Chicago, with a total market size of 12 million residential customer accounts.
The Gateway acquisition forms part of Centrica's strategic priority to build an integrated North American business. In 2010, Direct Energy increased its natural gas reserves by approximately 60% with the purchase of assets in the Wildcat Hills region of Alberta, Canada. It has also established itself as a leading player in the North American home energy services market with the acquisition of Clockwork Home Services. Direct Energy now has 6 million customer relationships across the United States and Canada.
Direct Energy President and CEO Chris Weston said: "Competitive retail markets in the North Eastern United States provide us with opportunities to grow our North American business. Gateway builds on the progress we've made in North America over the past decade and represents another important step towards our stated goal of doubling the profitability of Direct Energy."
Centrica Investor Relations: 01753 494900
Centrica Media Relations: 0800 107 7014
Gateway Energy Services Corporation is a privately-held, independent energy supplier, headquartered in Montebello, NY, with satellite offices in Rochester and Syracuse, NY, and Wilkes-Barre, PA.
The transaction is subject to regulatory and Gateway Energy Services' shareholder approval, and is expected to close in early May 2011.
The transaction will be made through Centrica plc's wholly owned subsidiary Direct Energy Services, LLC.