NRG Energy to acquire Direct Energy from Centrica for $3.62bn

NRG Energy acquisition of Direct Energy : US energy company NRG Energy has agreed to acquire Direct Energy, a North American subsidiary of British electric services company Centrica, in an all-cash deal worth $3.62bn.

Direct Energy is a retail provider of electricity, natural gas, and energy-related products and services for homes and businesses across all 50 states in the US with more than three million customers.

NRG Energy said that the acquisition of Direct Energy consolidates on and complements its integrated model, thereby allowing the better matching of electricity generation with customer demand. Besides, the acquisition widens NRG Energy’s footprint into states and regions where it currently does not operate, thereby helping in its efforts to diversify its business.

Commenting on NRG Energy acquisition of Direct Energy, Mauricio Gutierrez – President and CEO of NRG Energy said: “This combination improves NRG’s status as one of North America’s premier integrated power companies, bringing the power of energy to people and organizations through our diverse generation platform and leading retail brands.

“The acquisition aligns with our broader strategy of perfecting our integrated business model and drives significant value creation for our customers and stakeholders. Direct Energy’s complementary assets, talented team and excellent customer service make it a natural fit for our portfolio, and we look forward to welcoming Direct Energy to the NRG team.”

NRG Energy acquisition of Direct Energy from Centrica. Photo courtesy of NRG Energy, Inc.

For Centrica, the divestiture is said to boost the long term strength of its balance sheet. The British electric services company plans to use the net cash proceeds for significantly cutting down its net debt and for making a material contribution to the defined benefit pension schemes of the group.

The deal is also said to help Centrica to concentrate on its key home markets of the UK and Ireland, where it enjoys leading positions in the market.

Chris O’Shea – Group CEO of Centrica, commenting on NRG Energy acquisition of Direct Energy, said: “The transaction provides Centrica with an opportunity to realise significant value for our shareholders at an attractive valuation. This disposal is aligned to our strategy to become a simpler, leaner business and in addition it will materially strengthen our balance sheet and remove a source of earnings volatility from the Group.

“Combined with our focus on completing our intended exits from Spirit Energy and Nuclear at the appropriate time, this is expected to lead to a more predictable and high-quality earnings stream moving forward.”

Closing of NRG Energy acquisition of Direct Energy

NRG Energy acquisition of Direct Energy is expected to be closed by the year end should it meet customary closing conditions, secure consents and regulatory approvals, including approval from Centrica’s shareholders and the US Federal Energy Regulatory Commission (FERC).