Centrica plc’s North American subsidiary, Direct Energy, has agreed to sell its Ontario home services business to EnerCare (TSX: ECI) for C$550 million (£300 million).
Direct Energy currently has nearly 1.9 million home services contracts in Ontario, to provide a range of plumbing, heating, ventilation, air conditioning and other related services. The majority of customers are served through a joint arrangement, under which EnerCare owns the water heater assets, while Direct Energy provides services and manages the customer relationships. This transaction will combine the two parts of the business into a single entity, wholly-owned and managed by EnerCare, enhancing the overall customer proposition.
Badar Khan, President and CEO of Direct Energy, said: “This is an attractive opportunity to realise value from the Canadian home services business. With our activities in Ontario no longer forming a material part of the business, we will focus our attention on opportunities in the United States and Alberta, through a range of innovative products, including combined energy and services offerings.”
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- The transaction is subject to customary regulatory approvals and is expected to close in 2014.
- EnerCare will acquire the Direct Energy-branded home and small commercial services business in Ontario. Direct Energy will retain the Airtron services business and other residual services franchises in the Province.
- The C$550 million headline consideration consists of $450 million of cash and $100 million of common equity in EnerCare which is subject to a 12-18 month lockup.
- In 2013, the Ontario home services businesses contributed C$37 million of EBITDA.
- EnerCare will license the Direct Energy brand for a 12 month transitional period, after which it will rebrand the acquired business.