Vistra Energy Will Become the Leading Residential Electricity Provider in the Nation
IRVING, Texas, Feb. 7, 2019 /PRNewswire/ — Today, Vistra Energy (NYSE: VST) and Crius Energy Trust (TSX: KWH.UN) announced they have entered into a definitive agreement pursuant to which Vistra will acquire Crius Energy for cash consideration of C$7.57 per trust unit. 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.
“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 Chief Executive Officer. “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.”
Morgan added, “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, Chief Executive Officer 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.”
Transaction Highlights
- • Strategic acquisition accelerating Vistra’s Midwest and Northeast growth strategy 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
- • High degree of overlap withVistra’sgeneration fleet; approximately 11.6 TWhs of load acquired, improvingVistra’smatch of its generation to load profile to approximately 45 percent
- • Establishes a platform for future growth, leveragingVistra’sexisting retail marketing capabilities and Crius Energy’s experienced team
- • Enhances integrated value proposition through collateral and transaction efficiencies, particularly via Crius Energy’s largely residential portfolio
- • ComplementsVistra’smunicipal aggregation and large commercial and industrial portfolio acquired from Dynegy in April 2018 and part of a broader organic expansion effort
- • Approximately US$328 million purchase price (assuming an exchange rate of US$0.76 for each C$1), whichVistraintends to fund with cash on hand, plusassumptionof Crius Energy net debt of approximately US$108 million
- • Attractivepremium of 38 percent above Crius Energy’s Feb. 6, 2019 closing price paid to Crius Energy unitholders
- • Acquisition economics exceedVistra’sinvestment threshold of mid-to-high teensunleveredreturns; achieved only through the expertise and scale of the Vistra retail business
- • Tuck-in acquisition with no anticipated changes toVistra’scapital allocation or deleveraging plans
- • Continued “focus on the customer” approach
- • Unanimous recommendation of Crius Energy’s Independent Directors in favor of the transaction, with voting and support agreements representing approximately 17 percent of Crius Energy’s units executed in support of the transaction
Transaction and Approvals
The proposed transaction has been structured as a sale of two wholly owned subsidiaries of Crius Energy that indirectly own the Crius Energy business. The definitive agreement includes customary deal protections, including non-solicitation covenants, the right of Vistra to match any competing proposals, and the payment of a termination fee to Vistra under certain circumstances.
The proposed transaction is subject to the approval of at least two-thirds of Crius Energy’s unitholders. Unitholders of Crius Energy representing approximately 17 percent of the units, including all of the directors and senior officers of Crius Energy, have entered into voting and support agreements with Vistra in support of the transaction.
In addition to satisfying the closing conditions and consents customary for a transaction of this nature, the transaction is also subject to applicable regulatory approvals, including the expiration or termination of any applicable waiting period under the United States Hart-Scott-Rodino Antitrust Improvements Act, and approval by the Federal Energy Regulatory Commission (FERC).
Pending the receipt of all necessary approvals and the fulfillment of all other customary closing conditions, the parties expect the transaction to close in the second quarter of 2019.