Centrica PLC (LON:CNA), the Windsor, U.K.-based owner of British Gas, announced Tuesday that its New Jersey-based subsidiary would enter the business of supplying U.S. East Coast business and industry with natural gas and electricity for $731 million in cash and $300 million in working capital.
The deal between Centrica’s Direct Energy Business LLC and Energy Marketing, a division of New York-based Hess Corp. (NYSE:HES), is part of Hess Corp.’s ongoing effort to exit downstream operations and focus on exploration and production, a multiyear restructuring program that includes selling its gasoline stations.
“The sale of Energy Marketing, along with the sales of four producing assets earlier this year, brings total year-to-date divestitures to $4.5 billion,” the company said Tuesday.
For Centrica the deal is part of its effort to double its North American profitability; it has previously expressed its interest in Hess’ storage facilities and pipelines. Centrica announced it was investing $1 billion Canadian dollars ($973 million) in gas and oil assets in Canada.
“The acquisition will make Direct Energy the largest business gas supplier on the East Coast and the second-largest business power supplier in the competitive U.S. retail markets,” Centrica said Tuesday.
Energy Marketing generated about $6 billion in revenue last year. The deal is expected to close before the end of the year pending regulatory approval.