CPN Calpine Corp.

NRG Energy Inc. (NRG) has agreed to buy a Philadelphia-based retail electricity and natural gas provider, Energy Plus Holdings LLC, for $190 million in cash. The company’s decision to buy privately held Energy Plus stems from the opportunity to expand its retail business in the northeastern part of the country.

Based in Philadelphia, Energy Plus has a proven ability to successfully enroll attractive customer groups through its exclusive marketing partnerships with leading loyalty program providers. Energy Plus primarily operates in the Northeast, with more than 90% of its customer base in the states of New York, Connecticut, Pennsylvania, New Jersey, Maryland and Illinois. Additionally, Energy Plus sells electricity in Texas and natural gas in New York and New Jersey.

Thus, the $190 million acquisition is expected to provide NRG Energy an effective retail platform to expand its customer services and products in multiple retail markets. The company expects the transaction to add immediate scale to its expanding retail customer base, particularly in the Northeast.

The deal requires regulatory approvals from the Justice Department and the Federal Energy Regulatory Commission. The transaction is expected to close in October, pending customary closing conditions and regulatory approvals.

Energy Plus has been one of the fastest-growing energy companies in the United States since inception, driven by its successful rewards programs offered through the company’s rapidly growing network of almost 100 industry-leading partners and associations.

Going forward, we see Energy Plus’ superior mix of quality service, energy choices and ongoing rewards programs together with assistance from NRG Energy to fructify in tremendous growth for the company.

Based in Princeton, New Jersey, NRG Energy Inc. operates as a wholesale power generation company. The company is also involved in fuel and transportation services, selling energy and related products in the United States and international markets. The company mainly competes with AES Corporation (AES) and Calpine Corp. (CPN).

We maintain a ‘Neutral’ recommendation on NRG Energy in the long term. The quantitative Zacks #3 Rank (short-term Hold rating) for the company indicates no clear directional pressure on the stock over the near term.

 
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