Competitive wholesale market power producer NRG Energy is acquiring retail distributor Direct Energy in a $3.625 billion all-cash transaction, the company announced Friday.
Centrica PLC has agreed to sell Direct, its North American subsidiary, in a deal expected to close by the end of the year. Once completed, it would add 3 million customers to NRG’s retail business and dramatically expand its reach outside of Texas.
“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,” said Mauricio Gutierrez, President and CEO of NRG. “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.”
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Acquiring Direct Energy provides NRG the ability to expand its renewable power purchase agreement (PPA) strategy outside of Texas, the company said. The deal is expected to create $300 million in annual run-rate synergies.
Direct Energy has customers in all 50 U.S. states and in Canada. More than 75 percent of those are outside Texas, which adds a sought-after regional diversity to NRG’s portfolio.
NRG’s power assets generate more than 23,000 MW from 40 plants across the U.S. The company is headquartered in both Princeton, New Jersey, and Houston.
Centrica PLC has owned Direct Energy since 2000.