British Gas owner, Centrica Plc sells its North American subsidiary Direct Energy for $3.63 billion, upscaling shares in the British Gas owner up more than 38%.
The company plans to use the cash from the sale to reduce net debt and contribute to its pension schemes. Following the sale, Centrica will focus on its home markets, the UK, and Ireland.
Centrica’s shares surged as much as 38.7% early on Friday, heading for their biggest intraday gain since 1997.
“We had a number of expressions of interest in Direct Energy but it came down to the right price and the right buyer,” Centrica Group chief executive Chris O’Shea told reporters on a conference call.
Last month, Centrica said it planned to cut around 5,000 jobs, almost 20% of its global workforce, as it deepened restructuring efforts in the wake of the COVID-19 pandemic.
The group reported a 14% drop in half-year operating profit to 343 million pounds ($436.3 million) from 399 million a year earlier. This was due to the pandemic which reduced energy use and weakened commodity prices.
The net impact on pre-tax profit from the pandemic was around 60 million pounds as the company took mitigating measures such as not paying senior management bonuses, cost savings, and using government job retention schemes.