NRG Energy Inc. acquires Direct Energy in all-cash transaction

Caitlin Cosper
By Caitlin Cosper
For business

(July 24, 2020)

NRG announced it will acquire Direct Energy.

NRG Energy Inc. (NRG) announced today it has reached an agreement with Centrica PLC to acquire Direct Energy in a $3.625 billion all-cash transaction. This acquisition would add more than 3 million resident and commercial customers across the U.S. and Canada to NRG’s electricity family.

NRG’s status as a growing, customer-focused energy provider likely will benefit from the addition of more than three million new customers. The transaction is predicted to generate approximately $740 million in annual EBITDA, or earnings before interest, taxes, depreciation, and amortization. Experts predict it will also improve cash flow and earnings diversification.

Direct Energy has operations in all 50 U.S. states and six Canadian provinces, making it one of North America’s largest and most well-known retail energy providers. Centrica PLC acquired Direct Energy in 2000. Direct Energy quickly grew to become one of the largest energy providers in North America, including more than 240,000 business customers.

Acquisition of Direct Energy a win for NRG

For NRG, this acquisition is a win in gaining support and recognition throughout the continent. With decades of experience in the energy industry, NRG is supported by approximately 23,000 megawatts of power generation.

“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 chief executive officer 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,” Gutierrez continued.

The transaction between the energy provider and Direct Energy greatly diversifies NRG’s presence because 76 percent of Direct Energy’s customers are outside Texas. With this acquisition, NRG’s portfolio will be better balanced along the East Coast while also allowing the energy provider to expand its renewable strategy outside the Lone Star State. Major NRG brands in Texas include Reliant Energy, Green Mountain Energy, Discount Power, and Cirro Energy.

The acquisition is scheduled to close by the end of 2020, although it is subject to customary closing conditions and regulatory approvals, including approval from Centrica PLC and the Federal Energy Regulatory Commission.

 

Caitlin Cosper is a writer within the energy and power industry. Born in Georgia, she attended the University of Georgia before earning her master’s in English at the University of North Carolina at Charlotte.

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