Centrica buys two US power suppliers in $110m cash deal

City A.M. Reporter
CENTRICA, which owns British Gas, said yesterday that it had agreed to buy two New York-based power providers from Iberdrola USA for $110.2m (£71.18m) in cash to strengthen its position and increase its customer base in the north east of the country.

The British utility’s North American subsidiary, Direct Energy Services, will buy Energetix and NYSEG Solutions, which operate out of Rochester and Binghamton, New York.

Direct Energy would add 245,000 customers in New York state with the acquisition.

Direct Energy president and chief executive Chris Weston said yesterday: “This acquisition supports Direct Energy’s strategy to grow and add scale to its US north east downstream power and gas position.”

Centrica has made a series of acquisitions in the region, with yesterday’s deal marking its third since last year. It has already acquired the New York-based energy retailer Gateway Energy Services and the Indiana-based gas supply business Vectren Source.

Centrica is expected to continue its hunt for businesses to buy in the US, in a bid to meet its target of doubling profits at its North American business between 2009 and 2014.

An additional payment of $5m may be made to extend brand ownership beyond an initial four year period under yesterday’s deal, expected to close in the third quarter of 2012.

The transaction is subject to regulatory approval and is expected to close in the third quarter of 2012.

Shares in Centrica, which have risen over seven per cent since the start of the year, closed 0.1 per cent higher at 319.1p.