Powergen nets power plants and TXU's retail business for £1.37 billion
Powergen today announced the acquisition of TXU's retail business and three coal-fired power stations for £1.37 billion. The deal does not include TXU's continental European businesses, its trading operation or its portfolio of contractual obligations.
According to a statement, TXU's 5.5 million electricity and gas customers will make Powergen one of the market leaders in energy retailing and a powerful force in the competitive UK energy market. Similarly, Powergen's acquisition of 3 coal-fired plants and the Citigen City of London CHP scheme will help ensure that the immediate needs of TXU customers can be met.
Paul Golby, Powergen UK's Chief Executive, said: 'This is a transforming deal for Powergen. Today we become the UK's largest electricity supplier and number two in the highly competitive retail energy sector, with 6 million electricity and 2.4 million gas customer accounts. This is a good day for all our customers and employees.'
Commenting on the sale and ongoing operations, Paul Marsh, TXU's Chief Operating Officer - Europe, said: 'With the proceeds of the sale and the continued support of creditors, we believe we are well placed to restructure the remainder of the UK and European operations to promote its future viability. It has been a hectic time since the events that led to a credit rating downgrade but we have made great progress in stabilising the business. '
Approval from the European Commission (EC) is required for this transaction. However, in view of TXU's situation, the EC has granted a derogation, which allows the transaction to proceed prior to completion of the approval process.
Under the terms of this deal around 1900 TXU employees, the majority of whom are based in Ipswich, have transferred to Powergen, a division of E.ON AG.
The acquisition, which Powergen expects to be earnings enhancing in the first full year, is a cash transaction, which has been funded through existing credit facilities.