Updated: NRG Energy Agrees To Acquire Stream Energy's Retail Electricity And Natural Gas Business

Stream To Be "Exclusive Marketer" To The Retail Energy Business Acquired By NRG

May 20, 2019

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Reporting by Paul Ring • ring@energychoicematters.com

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Stream said that, "At closing, Stream’s remaining business will emerge as a new brand to market energy and wireless services through its independent sales organization and will be the exclusive marketer to the retail energy business acquired by NRG"

Stream’s retail energy business provides electricity and natural gas in over 40 deregulated markets across the United States. As noted below, Stream Energy serves more than 600,000 Residential Customer Equivalents (RCEs) in nine states and the District of Columbia.

Earlier (Posted at 7:11 a.m. ET, 5/20/19)

NRG Energy, Inc. 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 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," NRG said

Stream Energy 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," NRG said

The transaction represents a 4.6x Enterprise Value/Adjusted EBITDA multiple of the expected annualized Adjusted EBITDA run rate of $65 million, NRG said (further details on calculation below)

"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."

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.

The 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

 

As used by NRG, 1 RCE represents 1,000 therms of natural gas or 10,000 kWh of electricity.

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