By Editors of Power Engineering
Calpine Corporation announced it has entered into an agreement to purchase Noble Americas Energy Solutions LLC, the nation’s largest independent supplier of power to commercial and industrial retail customes.
The agreed purchase price is set at $800 million, plus an additional $100 million of net working capital at closing. The acquisition is expected to close by the end of the year.
Calpine expects to recover approximately $200 million through collateral synergies and the runoff of acquired legacy hedges within the first year, resulting in a net cash deployment of $700 million, or five times NAES’ EBITDA.
“The acquisition of this well-regarded organization known for providing sophisticated customers with highly customized products is 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 through the Champion Energy platform,” said Thad Hill, Calpine’s president and CEO. “In addition to expanding our retail customer sales channels and product offerings, we will more than double the volume of retail load we are capable of serving across the country from our complementary wholesale power generation fleet.”
Calpine expects to fund the acquisition with a combination of cash on hand and temporary bridge loan financing of up to $550 million. The loan will be repaid with asset sales and cash from operations.
“Financially, this transaction is highly cash flow and credit accretive, given a rapidly amortizing bridge loan, the achievement of collateral synergies and the ongoing generation of stable and substantial cash flows,” concluded Hill. “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, which will help ensure future success of the business.”
NAES serves customers in 18 states, including California, Texas and states in the mid-Atlantic and northeastern regions.