— Acquisition to strengthen NRG’s position as a
leading, customer-driven energy company —
- $300 million all-cash transaction1
- $65 million annualized Adjusted
EBITDA2
- Adds more than 600,000 Residential
Customer Equivalents3
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 $65 million.2
Approvals and Time to Close
The transaction is expected to close in the third quarter of
2019 and is subject to various customary closing conditions,
approvals and consents, including the Federal Energy Regulatory
Commission (FERC), Georgia Public Service Commission, and
antitrust review under Hart-Scott-Rodino.
Table 1:
Acquisition Run Rate Adjusted EBITDA ReconciliationThe
following table summarizes the calculation of adjusted EBITDA and
provides a reconciliation to Net Income and total comprehensive
income
($ in millions)
Annualized Net Income /
(Loss) 41 Plus: Income tax - Interest expense, net -
Depreciation, amortization, Amortization of Contracts and ARO
expense 21
EBITDA 62 Acquisition-related transaction
& integration costs 3 Reorganization costs - Other non
recurring charges - Mark-to-Market (MtM) losses / (gains) on
economic hedges -
Adjusted EBITDA 65
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.
About NRG
At NRG, we’re redefining power by putting customers at the
center of everything we do. We create value by generating
electricity and serving more than 3 million residential and
commercial customers through our portfolio of retail electricity
brands. A Fortune 500 company, NRG delivers customer-focused
solutions for managing electricity, while enhancing energy choice
and working towards a sustainable energy future. More information
is available at www.nrg.com. Connect with NRG
on Facebook, LinkedIn and follow us on Twitter @nrgenergy,
@nrginsight.
Forward-Looking Statements
The information presented in this press release includes
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Exchange Act. These
statements involve estimates, expectations, projections, goals,
assumptions, known and unknown risks and uncertainties and can
typically be identified by terminology such as “may,” “should,”
“could,” “objective,” “projection,” “forecast,” “goal,” “guidance,”
“outlook,” “expect,” “intend,” “seek,” “plan,” “think,”
“anticipate,” “estimate,” “predict,” “target,” “potential” or
“continue” or the negative of these terms or other comparable
terminology. Such forward-looking statements include, but are not
limited to, statements relating to the satisfaction or waiver of
the conditions necessary for NRG to complete the transaction
contemplated by the purchase agreement, as well as the anticipated
timing of the closing of the transactions contemplated by the
purchase agreement. These forward-looking statements are subject to
a variety of risks and uncertainties. Such risks and uncertainties
include, but are not limited to, the possibility that the closing
conditions to the transactions contemplated by the purchase
agreement may not be satisfied or waived in a timely manner or at
all, including that a governmental entity may prohibit, delay or
refuse to grant a necessary regulatory approval, as well as factors
described from time to time in NRG's filings with the Securities
and Exchange Commission at www.sec.gov.
Although NRG believes that its expectations are reasonable, it
can give no assurance that these expectations will prove to be
correct, and actual results may vary materially. NRG undertakes no
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise,
except as required by law.
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version on businesswire.com: https://www.businesswire.com/news/home/20190520005335/en/
Media Corporate:Candice
Adams609-524-5428Candice.adams@nrg.com
Media Retail:Dave
Schrader267-295-5768Dave.schrader@nrg.com
Investors:Kevin L. Cole,
CFA609-524-4526investor.relations@nrg.com
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