Smart-meter business Energy Assets has acquired a subsidiary of Gazprom, the huge Russian gas company, in a £13.5 million ($21.7 million) deal that strengthens its position as one of the UK’s biggest suppliers of gas-metering services to the industrial and commercial (I&C) market.
The Scotland-based firm has announced a takeover of Gazprom Global Energy Solutions (GGES) (Manchester, UK), which provides automated meter reading (AMR) services to gas suppliers and blue-chip companies in the I&C market.
GGES currently manages about 27,000 data points across the gas, water and electricity sectors. Combination with the 21,000 data points managed by Energy Assets will create one of the biggest portfolios in the UK I&C market.
Energy Assets (Livingston, UK) will also gain additional expertise as a result of the takeover, including GGES’s AMR technology for gas and water applications, its low-power-radio data-collection technology, and a range of other products and intellectual property, although Gazprom will retain the rights to use AMR intellectual property in Russia, Germany and the FSU countries.
In addition, Energy Assets, which currently manages some 53,000 meters, will become the primary meter asset manager for Gazprom Energy’s UK portfolio. The companies say the deal provides Energy Assets with an exclusivity period of five years during which it will install new metering assets and undertake meter exchanges across Gazprom Energy’s existing and new UK portfolio.
The deal is to be financed through a cash payment of £6 million plus a payout of £3 million depending on the level of installations carried out by Energy Assets.
Energy Assets will also assume GGES debts of about £4.5 million, which it will refinance after the acquisition.
It is funding the takeover through the £11.7 million it raised from floating on the London Stock Exchange in March.
With gross assets of £6.5 million, GGES reported revenues of £5.1 million and profit before tax of £200,000 for the 2011 financial year. Combining resources will enhance earnings expectations from 2013/14 onwards, say the directors of both companies.
“This transaction provides Energy Assets with a fantastic opportunity to continue the development of the long standing relationship between the two companies and is a significant step in the delivery of Energy Assets’ strategy to increase meter asset management and ownership as set out at the time of the IPO,” said Phil Bellamy-Lee, the chief executive of Energy Assets, in a statement.
“We have worked with Energy Assets for some years in a strategic partnership,” said Vitaly Vasiliev, the chief executive of Gazprom Marketing & Trading. “We know from experience that Energy Assets offers our customers great service and will continue to do so. This deal offers those customers an ongoing commitment to excellence and allows both our businesses to concentrate on activities that are key to our core plans for growth.”