Irving, Texas-based Vistra Energy (NYSE: VST) announced it has entered into an agreement to acquire Ambit Energy for $475 million plus net working capital in an all-cash transaction. Following the closing of the transaction, Vistra’s share of the ERCOT residential market will grow from approximately 25 percent to approximately 32 percent and an industry-leading 26 percent in all U.S. competitive markets.
“Ambit is a very attractive standalone retail company and a great match for Vistra’s retail business, given its leading direct selling capability and its proprietary technology platform. Importantly, Ambit’s retail load is nearly two-thirds in the ERCOT market, followed by PJM and the northeast, and this load is 90 percent comprised of residential and small business customers,” said Curt Morgan, Vistra’s president and chief executive officer. “This acquisition offers significant benefits including consequential synergies and a material enhancement of Vistra’s generation to retail load match, with total customers reaching nearly 5 million, and our expected returns from the transaction representing a superior use of capital. Given the attractive EBITDA to free cash flow conversion profile of the business, we expect the transaction to have a minimal impact on Vistra’s credit metrics and our capital allocation plan moving forward.”
Dallas-based Ambit serves approximately 1.1 million residential customer equivalents in 17 states. Vistra stated in the press release that the North Texas overlap of administrative functions will uniquely position Vistra to capture synergies and enable the teams to quickly integrate operations. Vistra expects the Ambit business will contribute approximately $125 million to adjusted EBITDA after the full run-rate of approximately $25 million of anticipated annual synergies is achieved.