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Centrica to Expand US Operations via £500M Acquisition

30 Jul 2013

Centrica plc’s North American subsidiary, Direct Energy Business, LLC, has agreed to acquire the New Jersey-based Energy Marketing business of Hess Corporation, for $731 million (£478 million) in cash plus net working capital, estimated at approximately $300 million (£196 million).

The Energy Marketing business is one of the largest B2B energy suppliers in the Eastern US, operating in 18 states.  The acquisition builds on Direct Energy’s existing capabilities and further integrates these activities along the gas value chain, linking gas supply from producers and other market participants through secured transport and storage capacity to the gas and power customer base.
In 2012, the Energy Marketing business supplied 378 billion cubic feet (bcf) of gas and 28 terawatt hours (TWh) of power to over 23,000 customers.  When combined with Direct Energy’s existing business, which in 2012 supplied 77bcf of gas and 51TWh of power, the acquisition will make Direct Energy the largest business gas supplier on the East Coast of the US and the second largest business power supplier in the competitive US retail markets.

Centrica’s CEO Sam Laidlaw said: “This transaction will transform our B2B operations in North America, giving us leading positions in business gas and power supply and creating a unique dual fuel business in the US”, referring to the dual fuel products of Hess corporation that aim to give flexibility between the use of fuel oil and natural gas in order to diversify each client’s energy portfolio.

Centrica expects to increase its downstream business exposure in US and create an integrated gas supply chain, which will double their profitability in the specific region over the next five years.