Centrica To Buy Hess Corp.'s Energy Marketing Business - Quick Facts

(RTTNews) - UK-based energy firm Centrica plc's North American unit, Direct Energy Business, LLC, would acquire the New Jersey-based Energy Marketing business of Hess Corp. (HES), for $731 million or 478 million pounds in cash plus net working capital, estimated at around $300 million.

The Energy Marketing business, a B2B energy supplier in the Eastern US, operates in 18 states; and has supplied 378 billion cubic feet of gas and 28 terawatt hours of power to more than 23,000 customers in 2012.

The business, which has an extensive portfolio of existing gas and power contracts, include purchase deals with Marcellus shale gas producers, gas storage and pipeline capacity, and gas and power supply agreements with customers, including local distribution companies. Further it has a tolling arrangement on the Bayonne Energy Centre gas-fired power plant, to supply power to its New York customers.

The Energy Marketing business had revenues of over $6 billion in 2012 and is likely to deliver nearly $200 million of EBITDA in 2013, with margins similar to that of Direct Energy's existing B2B activities. The transaction is expected to be earnings accretive in its first full year, after the effect of fair value accounting, and in addition is anticipated to deliver operational efficiencies.