Centrica plc announces that it has entered into an agreement to sell its North American energy supply, services and trading business, Direct Energy, to NRG Energy, Inc. for $3.625 billion in cash (equivalent to approximately £2.85 billion) on a debt free, cash free basis.

Transaction headlines

- Attractive valuation for Direct Energy, representing an EV to 2019 Underlying Adjusted EBITDA multiple of 7.9x
- Increases the long term strength of the Group’s balance sheet with Net Cash Proceeds intended to be used to reduce net debt significantly and to make a material contribution to the Group’s defined benefit pension schemes
- Alongside the significant restructure announced in June 2020, creates a simpler and leaner energy services and solutions company, focused on delivering for its customers and enabling the transition to a lower carbon future
- Centrica to focus on its core home markets of the U.K. and Ireland, where it has leading market positions
- More predictable and stable cash flows from the remaining Group
- The Transaction is conditional upon agreement by Centrica’s shareholders and various other approvals, including regulatory approvals, and is expected to complete in the fourth quarter of 2020
- Centrica’s Board considers the Transaction to be in the best interests of Centrica and its shareholders

Chris O’Shea, Group Chief Executive of Centrica, said:

“The transaction provides Centrica with an opportunity to realise significant value for our shareholders at an attractive valuation. This disposal is aligned to our strategy to become a simpler, leaner business and in addition it will materially strengthen our balance sheet and remove a source of earnings volatility from the Group. Combined with our focus on completing our intended exits from Spirit Energy and Nuclear at the appropriate time, this is expected to lead to a more predictable and high-quality earnings stream moving forward.

Direct Energy is a strong business with a great team. I believe NRG will be an owner who will invest in the business and make it even better. The remaining Company will be an energy services and solutions company, helping customers to transition to a lower carbon future, focused on the U.K. and Ireland where we have leading market positions. Alongside our recently announced organisational restructure, which puts the customer at the heart of everything we do and accelerates the delivery of targeted cost savings, this transaction is a fundamental step in the turnaround of Centrica and will leave us well placed to deliver for both customers and shareholders.”

About Centrica

Centrica is a leading international energy services and solutions provider, founded on a 200-year heritage of serving people. Through our two customer-facing divisions, Centrica Consumer and Centrica Business, we supply energy, services and solutions to over 26 million customer accounts. We serve customers across the UK, Ireland, North America and Continental Europe through strong brands such as British Gas, supported by around 13,000 highly trained engineers and technicians. We are focused on satisfying the changing needs of our customers, enabling them to transition to a lower carbon future. Our aim is to reduce emissions in line with the Paris climate goals by 2030 and develop a path to net zero by 2050.

Energy Marketing and Trading is the trading and optimisation arm of Centrica plc. We are a leading provider of energy management and optimisation services to businesses, in addition to managing commodity risk and providing wholesale market access for the Centrica Group. We have over 14GW of capacity under contract in Europe, more than half of which is for renewable assets. We also continue to expand our global LNG business, having built a full range of LNG trading, optimisation and operations capability.

About NRG Energy

At NRG, we’re bringing the power of energy to people and organizations by putting customers at the center of everything we do. We generate electricity and provide energy solutions and natural gas to more than 3.7 million residential, small business, and commercial and industrial customers through our diverse portfolio of retail brands. A Fortune 500 company, operating in the United States and Canada, NRG delivers innovative solutions while advocating for competitive energy markets and customer choice, and by working towards a sustainable energy future.