Irving-based Vistra Energy (NYSE: VST) is adding to its retail portfolio.
Vistra and Crius Energy Trust (TSX: KWH.UN) on Feb. 8 announced they have entered into a definitive agreement in which Vistra will acquire Crius Energy for about $328 million.
Following the closing of the transaction, Vistra will be the leading residential electricity provider in the nation with operations in 19 states and the District of Columbia, according to the company. In an investor presentation, Vistra said the acquisition will give the company organic growth in the Midwest and Northeast via Crius Energy’s presence in 19 states and the District of Columbia, selling both electricity and natural gas products primarily to high value residential and small business customers.
The company noted the high degree of overlap with Vistra’s generation fleet; approximately 11.6 TWhs of load acquired, improving Vistra’s match of its generation to load profile to approximately 45 percent.
The acquisition also establishes a platform for future growth, leveraging Vistra’s existing retail marketing capabilities and Crius Energy’s experienced team, according to Vistra.
The acquisition also complements Vistra’s municipal aggregation and large commercial and industrial portfolio acquired from Dynegy in April 2018 and part of a broader organic expansion effort.
“We are excited to announce this transaction, which will accelerate Vistra’s retail growth expansion plans via the acquisition of a high-quality electricity and gas retailer serving primarily residential and small business customers,” said Curt Morgan, Vistra’s President and CEO. “The Crius Energy portfolio has a high degree of overlap with Vistra’s generation fleet and complements Vistra’s existing municipal aggregation and large commercial and industrial portfolio in the Midwest and Northeast markets. We welcome the Crius Energy team to the Vistra family.”
“This transaction is consistent with Vistra’s stated strategy to grow our retail business at attractive multiples while remaining committed to our capital allocation and deleveraging plans.”
The announcement of this transaction follows a competitive strategic review process led and unanimously recommended by the Independent Directors of Crius Energy, and unanimously approved by Crius Energy’s Board of Directors.
“We are pleased to announce this transaction and are confident that it is in the best interests of our unitholders and other stakeholders,” said Brian Burden, chairman of Crius Energy’s Board of Directors. “This transaction is the result of an exhaustive review of strategic alternatives undertaken by our Board of Directors, with the assistance of outside advisors, to maximize unitholder value and unlock the company’s intrinsic value, while eliminating execution risk. We are confident that this transaction represents the best outcome for our unitholders and other stakeholders and look forward to completing the transaction.”
The purchase price of C$7.57 per unit represents an approximately 38 percent premium to Crius Energy’s unit price of C$5.48 as of market close on Feb. 6, 2019. In addition to the purchase price, Crius Energy unitholders will receive Crius Energy’s previously-declared distribution for the first quarter of 2019 in the amount of C$0.209 per unit for total consideration in the amount of C$7.779 per unit. Under the definitive agreement, Crius Energy has agreed not to declare any further distributions prior to the closing.
“We are excited to have reached an agreement with Vistra, a leading integrated power company serving approximately 2.9 million customers with more than 40 GW of generation,” said Michael Fallquist, CEO of Crius Energy. “Partnered with Vistra, Crius Energy will be well-positioned to continue providing our customers and strategic partners with differentiated products and services.”
Through its retail and generation businesses which include TXU Energy, Homefield Energy, Dynegy, and
Luminant, Vistra operates in 12 states and six of the seven competitive markets in the U.S., with about 5,400
employees. Vistra’s retail brands serve approximately 2.9 million residential, commercial, and industrial
customers across five top retail states, and its generation fleet totals approximately 41,000 megawatts of generation capacity, with a diverse portfolio of natural gas, nuclear, coal, solar and battery storage facilities. The company is currently developing the largest battery energy storage system of its kind in the world – a 300-MW/1,200-MWh system in Moss Landing, California.
Guggenheim Securities LLC is serving as financial advisor to Crius Energy and Bennett Jones LLP and Baker Botts LLP are serving as legal advisors to Crius Energy.
RBC Capital Markets is serving as financial advisor to Vistra and Latham & Watkins, LLP is serving as legal advisor to Vistra.