Vistra's spending spree continues with $475M acquisition of Ambit

Dive Brief:

Texas-based Vistra Energy on Tuesday announced an agreement to buy in-state competitor Ambit Energy for $475 million plus working capital in an all-cash transaction.
The deal will increase Vistra's residential market share in the Electric Reliability Council of Texas (ERCOT) from around 25% to 32%, and an industry-leading 26% in all U.S. competitive markets.
But Vistra's acquisition of Ambit is also raising fears among some consumer advocacy groups of potentially higher electricity prices in Texas, with two providers — Vistra and NRG Energy — controlling nearly two-thirds of the market.

Dive Insight:

Through the purchase of Ambit, Vistra will add another 1.1 million customers across 17 states to its customer base, bringing its total to nearly 5 million nationwide. The vast majority of Ambit's customers, around 90%, are residential and small business customers, Curt Morgan, Vistra's president and chief executive officer, said in a statement.

About two-thirds of Ambit's retail load is in the ERCOT market, "followed by PJM and the Northeast," he said.

Vistra expects the Ambit business to contribute roughly $125 million to its annual adjusted EBITDA after the full integration of both businesses. Ambit's status as the largest energy-focus direct seller in the country was another selling point, according to Morgan.

"Ambit is a very attractive standalone retail company and a great match for Vistra's retail business, given its leading direct selling capability and its proprietary technology platform," he said.

However, a consumer advocacy group in Texas has raised concerns about the deal. Tim Morstad, associated state director AARP Texas, told the Houston Chronicle that there should be a "real fear" that fewer players could lead to increase electricity prices in the Lone Star state.

Pat Hammond, a spokesperson for NRG, dismissed concerns about the negative impact of consolidation in the energy space, saying that recent mergers and acquisitions won't change the market.

Vistra's latest deal comes less than a month after its $378 million acquisition of Toronto-based Crius Energy. NRG recently went on a similar buying spree, acquiring Texas-based Stream Energy for $300 million in May.

The deal between Vistra and Ambit remains subject to regulatory approval, but the parties expect it will close before the end of this year.

Meranda Cohn, a spokeswoman for Vistra, told Utility Dive that she cannot comment beyond the news release.