Drax powers up with £340m energy supplier acquisition
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DRAX GROUP is set to acquire energy supplier Opus in a deal worth £340m as it looks to further diversify its retail business.
The Selby-based energy generation firm, which owns the coal and biomass plant near the town has entered a conditional agreement to acquire the business at it looks to improve earnings and deliver long term growth.
Northampton-based Opus Energy is an energy retailer serving the SME market. Its acquisition will allow Drax to accelerate its retail strategy. Founded in 2002, Opus serves more than 295,000 customer sites.
The £524m-turnover business has around 700 employees. Just over 50% of the business is owned by management with the remaining stakeholding held by Telecom Plus plc and International Power, a whilly-owned subsidiary of Engie.
Andy Koss, chief executive of Drax Power spoke to TheBusinessDesk.com this morning. He said: “Our existing strategy we’ve delivered on, turning half of our six generators over from coal to wood pellets, we’ve built the business in the US and our retail offering in the form of Haven Power which specifically focuses on the industrial and commercial sector of the market – big companies at the top in terms of energy supply.
“The acquisition of Opus is an exciting opportunity to buy a business focused on the smaller end of the market. They have built a very successful brand and business model and will be a complement to Haven and it forms part of broader strategy to build longer-term, more diversified earnings.”
It will also acquire four Open Cycle Gas Turbine development projects for electricity generation. They have a total capacity of 1,200MW and will cost the business £18.5m enabling it to diversify the Drax energy generation business.
The company, which has been focusing on a conversion of its North Yorkshire plant from coal to biomass, and says it is still looking at opportunities to acquire further wood pellet plants.
Drax group chief executive Dorothy Thompson said that five of its leading shareholders representing over 45% of the issued share capital have indicated that they will support the transaction.
The deal is subject to shareholder approval and approval of CfD by the European Commission.
Drax also said it continues to expect full year EBITDA to be around the bottom of the range of current market forecasts.
Dorothy Thompson, chief executive officer of Drax Group, said: “Drax is already playing a vital role in helping change the way energy is generated, supplied and used as the UK moves to a low carbon future.
Today we are pleased to announce the proposed acquisition of Opus Energy, the UK’s leading challenger retail supplier in the SME market, creating a strong and competitive presence complementing our existing Haven Power offer.
“We are pleased that five of our leading shareholders representing over 45% of the issued share capital have indicated that they will support the transaction, and we thank them for their support.
We are also announcing the acquisition of four OCGT development projects, which will play an important role in helping government meet their ambition of new gas generation, reducing carbon emissions, forcing more coal off the system, providing additional system support to ‘plug the gaps’ created by intermittent renewables and boosting security of supply.
With the right conditions, we can do even more, converting further units at Drax to use sustainable biomass in place of coal. This is the fastest and most reliable way to support the UK’s decarbonisation targets, whilst minimising the cost to households and businesses.
These initiatives mark an important step in delivering our strategy, contributing to stronger, more predictable, long-term, financial performance, through greater diversification of the businesses, delivering more opportunities right across the markets in which we operate.”
The Board of Opus Energy commented:”We are pleased to announce today that the shareholders of Opus Energy have unanimously agreed to accept Drax’s offer to acquire the whole of the Opus group subject to certain completion conditions.
“Since its inception in 2002, the company has grown to become one of the UK’s biggest suppliers of energy to business customers, with a market share of 8.3% of non-domestic business supply and over 295,000 customer sites supplied. The shareholders believe that the offer from Drax provides a unique opportunity which is strategically compelling for the Opus Energy group and which will allow the business to move forward to its next stage of growth.”