NRG Energy (NRG) Reports Acquisition of Retail Electricity & Natural Gas Business from Stream Energy

NRG Energy, Inc. (NYSE: NRG) has agreed to acquire Stream Energy’s retail electricity and natural gas business for $300 million plus working capital in an all-cash transaction.

“This transaction will strengthen NRG’s position as a growing, customer-driven energy company. It represents another step in perfecting our integrated business model,” said Mauricio Gutierrez, president and chief executive officer, NRG Energy. “Stream Energy’s retail energy business provides NRG an attractive opportunity to increase our national retail leadership position and potential for growth.”

Strategic and Financial Benefits

This acquisition, with an anticipated $65 million annual EBITDA contribution, is expected to further enhance NRG’s position as the premier retail energy provider in the U.S. and, when combined with NRG’s generation assets, will enable NRG to deliver even greater value to customers and shareholders.

Stream Energy, one of the largest direct selling companies in the energy market and one of the nation’s fastest growing retailers, serves more than 600,000 Residential Customer Equivalents (RCEs) in nine states and the District of Columbia. The transaction is expected to increase NRG’s market share in Texas, Pennsylvania and a number of other markets in the Eastern U.S., accelerating the pace of growth in these markets. The combination will also enhance NRG’s multi-brand strategy.

Forecast

The transaction represents a 4.6x Enterprise Value/Adjusted EBITDA multiple of the expected annualized Adjusted EBITDA run rate of $65 million.2

Approvals and Time to Close

The transaction is expected to close in the third quarter of 2019 and is subject to various customary closing conditions, approvals and consents, including the Federal Energy Regulatory Commission (FERC), Georgia Public Service Commission, and antitrust review under Hart-Scott-Rodino.

Table 1:

Acquisition Run Rate Adjusted EBITDA Reconciliation
The following table summarizes the calculation of adjusted EBITDA and provides a reconciliation to Net Income and total comprehensive income

1 Excluding working capital

2 See reconciliation of Adjusted EBITDA to net income in Table 1.

3 Residential Customer Equivalent (RCE) is a unit of measure used by the energy industry to denote the typical annual commodity consumption by a single-family residential customer. 1 RCE represents 1,000 therms of natural gas or 10,000 kWh of electricity.

You May Also Be Interested In

• Marsh McLennan Agency (MMC) to acquire Fisher Brown Bottrell Insurance, Inc.
• Citi Downgrades Liberty SiriusXM (LSXMA) to Neutral, 'fairly balanced at prevailing levels'
• Akamai's (AKAM) API Security Product Achieves PCI Compliance and Sees Tremendous Customer Growth