Centrica plc's North American subsidiary, Direct Energy, has agreed to acquire the Texas-based energy retailer First Choice Power for $270 million (£175 million) in cash, plus additional working capital.
First Choice Power has more than 220,000 residential and commercial electricity customer accounts in Texas. This acquisition supports Direct Energy's strategy to grow and extend its North American downstream retail business, and strengthens its position as the third largest energy retailer in Texas - taking its number of electricity customer accounts in the state to more than 830,000.
As one of the five legacy players in Texas, First Choice Power has a customer base with high brand loyalty. The combination of First Choice Power with Direct Energy's existing Texas operations will lead to significant synergies through integration of the businesses.
First Choice Power was also the first player to offer smart meter prepaid propositions in Texas and this acquisition will further enhance Direct Energy's position in this area, providing access to strategic prepaid partnerships that will help support future growth in this key segment of the market.
Direct Energy President and CEO Chris Weston said: "This acquisition is another important step towards growing scale and leadership in our North American business. First Choice Power is an established brand with a loyal customer base. Its addition to the Direct Energy family will significantly enlarge our business in one of the key US deregulated residential markets, providing a valuable platform for future growth."
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First Choice Power, headquartered in Irving, Texas, is a wholly-owned subsidiary of PNM Resources.
The transaction is subject to regulatory approval and is expected to close in November 2011.
The acquisition will be made through Centrica plc's wholly owned subsidiary Direct LP, Inc.