Dive Brief:
- Calpine has struck a deal to purchase Noble Americas Energy Solutions LLC (NAES) for $800 million plus an estimated $100 million of net working capital at closing, SNL reports.
- Officials said the deal would more than double the volume of retail load Calpine can serve with its combined wholesale power generation fleet.
- Currently, NAES serves commercial and industrial customers in 18 states, including California, Texas, the Mid-Atlantic and Northeast.
Dive Insight:
Calpine officials said the deal, announced this week, was a financial win and would be cash flow and credit accretive, allowing the company to recover approximately $200 million through synergies and the runoff of legacy hedges.
Most of those benefits happen in the first year, the company said, "resulting in expected net cash deployed of approximately $700 million (including working capital), or approximately five times NAES’ recent and expected run-rate Adjusted EBITDA."
Calpine will fund the acquisition with a combination of cash on hand and temporary bridge loan financing of up to $550 million.
Calpine President and CEO Thad Hill called the merger a "natural fit with Calpine’s customer-centric culture and will allow us to build upon the success we have experienced since our entry into retail last year."
Last July, Calpine agreed to purchase Houston-based Champion Energy Marketing LLC for $240 million. The energy retailer was expecting to provide 22 TWh of residential, commercial and industrial customer load in last year, concentrated in Texas and the Northeast.
“In addition to delivering strong annual cash flow, the strong sales effort by the NAES team has continued to build the mark-to-market value of their book over the last several years," Hill added.
NAES will maintain its headquarters in San Diego; NAES President Jim Wood will continue to lead the company.
The companies expect the deal to close later this year, following review by the Federal Energy Regulatory Commission, an antitrust review under the Hart-Scott-Rodino Act, and the approval of shareholders. Calpine's generation fleet includes 84 power plants in operation or under construction, representing more than 27,000 MW of capacity.
