Drax to acquire Opus Energy, 4 OCGT development projects

By Erin Voegele | December 07, 2016

On Dec. 6, Drax Group plc announced plans to acquire Opus Energy Group Ltd. and four open cycle gas turbine (OCGT) development projects. Drax also said it is continuing to monitor opportunities to acquire additional wood pellet plants.

The proposed acquisition price for Opus Energy is £340 million ($429.2 million). The proposed acquisition price for the four OCGT projects, which have a combined capacity of 1,200 MW, is £18.5 million, with final consideration dependent on clearing price in capacity market auctions.

In its statement, Drax noted that is has been exploring options to further improve earnings quality and deliver targeted long-term growth. As part of this effort, the company has been evaluating opportunities to diversify across the markets in which it operates, including pellet supply, generation and retail. The conditional agreements to acquire Opus Energy and the OCGT projects resulted from this ongoing process.

According to Drax, the acquisition of Opus Energy is subject to approval of the contract for difference (CfD) by the European Commission. The company noted it remains confident in the approval of the contract.

“Drax is already playing a vital role in helping change the way energy is generated, supplied and used as the U.K. moves to a low carbon future,” said Dorothy Thompson, CEO of Drax Group. “Today we are pleased to announce the proposed acquisition of Opus Energy, the UK’s leading challenger retail supplier in the SME market, creating a strong and competitive presence complementing our existing Haven Power offer. “

“We are pleased that five of our leading shareholders representing over 45 percent of the issued share capital have indicated that they will support the transaction, and we thank them for their support,” Thompson continued.

“We are also announcing the acquisition of four OCGT development projects, which will play an important role in helping government meet their ambition of new gas generation, reducing carbon emissions, forcing more coal off the system, providing additional system support to ‘plug the gaps’ created by intermittent renewables and boosting security of supply,” she said.

“With the right conditions, we can do even more, converting further units at Drax to use sustainable biomass in place of coal. This is the fastest and most reliable way to support the U.K.’s decarbonization targets, whilst minimizing the cost to households and businesses,” Thompson said. “These initiatives mark an important step in delivering our strategy, contributing to stronger, more predictable, long-term, financial performance, through greater diversification of the businesses, delivering more opportunities right across the markets in which we operate.”

“We are pleased to announce today that the shareholders of Opus Energy have unanimously agreed to accept Drax’s offer to acquire the whole of the Opus group subject to certain completion conditions,” said the board of Opus Energy in a statement. “Since its inception in 2002, the company has grown to become one of the U.K.’s biggest suppliers of energy to business customers, with a market share of 8.3 percent of non-domestic business supply and over 295,000 customer sites supplied. The shareholders believe that the offer from Drax provides a unique opportunity which is strategically compelling for the Opus Energy group and which will allow the business to move forward to its next stage of growth.”