26 Feb 2002 – Centrica, Britain’s biggest electricity and gas supplier said it agreed to acquire NewPower Holdings, the US company of which Enron owns 43 per cent, for $130m.
Centrica has indicated an intention to expand its North American operations and the NewPower acquisition will add 650 000 new customers taking its customer base up to about 4.3m in the US and Canada.
The deal will give Centrica a platform for growth in key target markets including Texas, Michigan, Ohio and Georgia. It furthers Centrica’s aim of having 10m ‘customer relationships’ in North America by the end of next year. Last month, Enbridge Services, a Canadian gas services company and supplier became the latest in a string of North American acquisitions by Centrica.
Last week, Centrica raised £400m ($568m) through a share placing to help it grow by acquisition in North America.
NewPower, the electricity and gas marketer, is the second Enron-related company to be bought by Centrica after it paid $138m for Enron Direct, a UK electricity and gas supplier.
Centrica said the acquisition would dilute earnings in 2002 and 2003, but add to earnings in 2004. In a press release, Centrica said it would begin a tender offer in a week to acquire all the outstanding shares of NewPower.
Roy Gardner, Centrica’s chief executive said NewPower’s strengths were its marketing, customer billing and care operations, and its “strong regulatory relationships in key markets”.
H. Eugene Lockhart, NewPower’s chairman said: “NewPower was formered to capitalise on the long-term opportunity presented by energy deregulation in the US and we have made great strides in doing so.” He said Centrica’s offer recognised market potential both companies could pursue together. Boards of both companies have approved the transaction, but the deal is subject to Enron bankruptcy court approval as well as approval by the Federal Energy Regulatory Commission (Ferc).