HomeServe expands US operations with £9m acquisition
HOME service provider HomeServe has expanded its global operations with the £9m acquisition of a US-based energy services contract business.
The acquisition by the Walsall-based business of National Grid Energy Services has been reduced by £10m due to net liabilities.
HomeServe (HSV) said the acquisition was a “significant step forward” for its global operations and the company was now intent on building on the platform for future growth.
Today’s transaction will also see HomeServe’s US subsidiary, Home Service USA enter into a 10-year marketing agreement with National Grid USA to use the National Grid Energy Services name.
National Grid Energy Services is a subsidiary of National Grid USA, one of the largest utilities in the US serving 6.7 million customers including more than over five million residential households
The agreement allows the firm to continue developing its policy business and will significantly increase its penetration into the US market.
National Grid Energy Services provides heating, cooling and water heater repair services to residential customers across four northern US states comprising Massachusetts, New Hampshire, New York and Rhode Island.
The business is a good match with HomeServe’s model. It has 365,000 annual service contracts across 186,000 customers and delivers its services through a network of directly employed repair technicians and operations support personnel.
Following acquisition, the existing employees will remain with the companies Home Service USA has taken over.
In a statement to the London Stock Exchange today, HomeServe said: “The acquisition provides our US operations with a robust and profitable platform to support further business development in the region as well as a significant increase in the scale of our operations in terms of both customer and policy numbers and claims handling capability.”
In the year to March 31, 2009, the contract business generated pre-tax profit of $6.3m (£4m) and as at September 30, 2009 had gross assets of $7.2m (£4.5m).
The net consideration payable on completion is expected to be $14m (£9m), with the gross consideration of $30m (£19m) reduced by net liabilities of approximately $16m (£10m).
HomeServe said the acquisition would be funded from existing facilities and the deal is expected to be completed within the next 120 days.
Richard Harpin, HomeServe chief executive, said: “We are delighted to announce this acquisition and marketing agreement which represents a significant step forward in the development of our US operations and reflects our strategy of expanding our international businesses through a combination of organic growth delivered by additional affinity partnerships and selective acquisitions.
“I am looking forward to working with National Grid as we continue to build a successful home assistance business in the US”.
Jonathan King, chief executive of Home Service USA, said “This is a transformational acquisition for Home Service USA, bringing us a long term marketing opportunity to over five million households, a significant increase in customers and contracts and a high quality group of employees.
“It accelerates our growth in the US and further establishes us as the leading provider of home emergency solutions to utility customers with over 1.1 million contracts.”
