Further building its Northeast base, Philadelphia-based UGI Corp. Thursday announced that its energy marketing subsidiary, UGI Energy Services, Inc., has agreed to acquire the northeast region gas marketing business of TXU Energy. Terms of the transaction were not disclosed.
UGI Energy Services will assume the existing sales and supply agreements for approximately 1,000 commercial and industrial customers located primarily in New York, Pennsylvania, Ohio, and New Jersey, bringing its total to 5,000 on 31 natural gas distribution systems in those states and Maryland, Virginia and Delaware. Virtually all of the TXU Energy employees associated with the customer accounts will join UGI Energy Services. The UGI marketing unit does business as GASMARK and POWERMARK.
UGI said the acquisition is expected to increase GASMARK sales volume by over 60% to approximately 140 Bcf, making it one of the region’s largest energy marketing companies.
“This transaction is our largest energy marketing acquisition to date,” said Lon R. Greenberg, chairman and CEO of UGI. “It not only improves customer density in our common marketing areas, but it expands our footprint in the Mid-Atlantic region. Both companies have a reputation for high levels of customer service and are committed to a smooth transition for the TXU Energy customers. We welcome the addition of the high quality employees that built the TXU Energy business into the regional player that it is today.”
The transaction follows similar but smaller acquisitions by UGI over the past three years that included all or portions of the energy marketing businesses of Columbia Energy, Conectiv, and PG Energy in the same region. “We have focused our energy marketing business on commercial and industrial natural gas customers in regions that permit us to capitalize on our existing network of assets and intellectual capital,” concluded Greenberg.
Results of the TXU Energy acquisition are expected to be modestly accretive to earnings in the first full year of operation.
TXU Corp. has been paring assets and operations since it took a large loss with the collapse of its European marketing operations late last year. The company has said it will exit its business marketing to large commercial and industrial customers in other parts of the U.S. and focus on its core operations in Texas. It has offices similar, but smaller than the one in the Northeast, serving those customers in the Midwest and West.
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