Centrica picks up an extra 1.3m Canadian customers

CENTRICA, the gas and home services group, has further expanded its growing North American operations with the £437 million acquisition of a Canadian home heating group.

The purchase of Enbridge Services will deliver Centrica another 1.3 million customers in Canada, doubling its existing total there and pushing it further towards its target of 10 million customers in North America by 2003.

Enbridge is also the biggest foreign acquisition to date for Centrica, which has grown rapidly since being spun off from the privatised former British Gas utility empire in 1997.

It comes ahead of planned deregulation of the Ontario power market in May this year, in advance of which Centrica has signed up another 600,000 customers.

Given that Enbridge also has heating servicing contracts with 325,000 customers in Canada, it means Centrica will have a total of 3.5 million North American "customer relationships" by the summer.

Enbridge’s activities include leasing water heaters and the installation and servicing of heating, ventilation and air conditioning services.

Centrica’s existing North American operations include Canadian home services business, Greensource, its Direct Energy Canadian retail brand, and Energy America in the United States which it bought a year ago.

Though it still derives most of its profits from its Morecambe Bay offshore UK gas field, Centrica has staked its future on development of a "cross-selling" model, where it pushes as many services as possible through a broad base of customers.

Its shares, down 0.75p at 235.25p yesterday, are at a premium to other UK utilities as a result.

However, analysts say the time is coming when the group must start justifying that premium.

Brokers at Schroder Salomon Smith Barney said recently: "2002 is likely to be an important year for Centrica in that the company needs to perform strongly if it is to achieve its targets and meet shareholder expectations."

Centrica chief executive Roy Gardner said: "Our success in developing multi-product relationships with UK consumers can now be replicated in Ontario, and will help us meet our growth targets for North America."

Centrica said the acquisition from parent group Enbridge Incorporated, based in Calgary, Alberta, would be funded from its existing debt programmes.