HOUSTON, March 21, 2011 /PRNewswire/ -- Leading North American energy retailer Direct Energy has reached an agreement to acquire residential and small commercial energy marketer Gateway Energy Services Corporation for $90 million in cash (including $13 million of tax assets) plus working capital, expanding its presence in New York, New Jersey, and Pennsylvania.
The acquisition further enhances Direct Energy's position as a leading North American provider of competitive electricity and natural gas solutions to residential and small business customers, increasing its customer relationships by more than 275,000 – located primarily in the US Northeast and Mid-Atlantic states.
The deal comes on the heels of a strong, strategic retail expansion in the US Northeast in 2010. Over the last year, Direct Energy has begun serving residential customers in nine new electricity markets, and four new natural gas markets, with a total market size of 12 million residential customer accounts. These include the urban centers of Pittsburgh and Philadelphia, PA, Baltimore, MD, Cincinnati, OH, and Chicago, IL.
"Restructured markets in North America are, for the most part, becoming more robust, particularly those in the US Northeast, a region that represents one of the more dynamic areas of retail opportunity for Direct Energy in the near term," said Chris Weston, President and CEO, Direct Energy. "As we outlined to our investors last year, Direct Energy is pursuing a strategic growth plan in North America, and this transaction is another step in the delivery of that plan."
Direct Energy forged ahead to deliver on parent company Centrica plc's North American growth strategy in 2010 by increasing its natural gas reserves by approximately 60 percent with the acquisition of Suncor Energy assets in the Wildcat Hills region of Alberta. The company also acquired Clockwork Home Services, Inc. making it North America's largest home energy services company.
Gateway Energy Services Corporation is a privately-held, New York-based, independent retail energy supplier focused on serving the power and natural gas needs of residential and commercial customers. The company is headquartered in Montebello, NY, with satellite offices in Rochester and Syracuse, NY, and Wilkes-Barre, PA.
"We see many opportunities with Gateway's business that can be leveraged to help Direct Energy achieve its goal of being the leading energy retailer in the markets where we operate," said Steven Murray, President, Direct Energy Residential. "This deal will allow us to deepen our penetration in key growth markets in the US, and add resources to our internal expertise that will allow us to drive forward on our strategic growth plan for the US Northeast and Mid-Atlantic states."
The transaction is subject to regulatory and Gateway Energy Services' shareholder approval, and is expected to close in early May of 2011.
About Direct Energy
Direct Energy is one of North America's largest energy and energy-related services providers with over 6 million residential and commercial customer relationships. Direct Energy provides customers with choice and support in managing their energy costs through a portfolio of innovative products and services. A subsidiary of Centrica plc (LSE: CNA), one of the world's leading integrated energy companies, Direct Energy operates in 46 states plus DC and 10 provinces in Canada. To learn more about Direct Energy, please visit www.directenergy.com.
SOURCE Direct Energy