Centrica buys US water heater renter

5th Sep 2013 12:11

Centrica has acquired a water heater rentals business to help its US arm Direct Energy expand its product range and double its profits in the next few years. Direct Energy has agreed to pay $30m (£19m) in cash plus working capital to purchase US-based home services business AWHR America's Water Heater Rentals.With around 80,000 residential customers in the US Midwest, Florida and US Northeast, AWHR is the largest independent water heater rental business in the US.AWHR also provides its rentals, repair and maintenance services in Ontario, Canada, where it currently has 1.1m customers.Direct Energy's President and Chief Executive Officer, Badar Khan, said: "The acquisition of AWHR presents us with a unique opportunity to grow Direct Energy's customer base by maximising our existing expertise in water heater rental services." Centrica said the addition of AWHR will not only extend Direct Energy's product range but also provide opportunities for cost saving and for cross-selling, with both companies sharing a business model and customer footprint.Khan added: "We will also benefit from operational efficiencies and expanded capabilities, as we seek continued growth in North America with the aim of doubling the profitability of our North American downstream business over the next 3-5 years."Earlier in the week Deutsche Bank upgraded Centrica from hold to buy and hiked its price target up to 430p as it expects the group's upstream energy business to benefit from a tighter European gas market over the coming two years, while the downstream British Gas business should return to growth against a backdrop of a recovering UK economy.Shares in Centrica were down 0.4% at 390.9p at 12:14 on Thursday. OH