Drax acquires Opus – expects to lower imbalance and trading costs

Drax shareholders have approved plans to acquire business energy supplier Opus Energy with 83% voting in favour. The £340 million acquisition will now be completed tomorrow (10 February).

Drax’s board said Opus will enhance Drax’s retail offering “by combining the leading ‘challenger’ small and medium enterprise (SME) business with Haven Power’s strength in the industrial and commercial market”. It noted that Opus had trebled its business (measured by meter point) in the six years to 31 March last year, and at that time it had 129,025 customers representing an 8% share of the non-domestic market (by meter-count).

Haven is Drax’s existing business customer brand. In the year to December 2015 it made gross profit of £19 million on a £1,290 million revenue, with 30,000 meter points. In comparison, in the year to March 2016 Opus Energy made £107 million profit on revenues of £573 million.

Drax said there would be synergies for Opus Energy in the acquisition because instead of buying most of its gas and electricity from a single counterparty it would source energy through Drax Power’s existing capability. Drax said the enlarged group would achieve  economies of scale by consolidating Haven Power’s and Opus’ electricity imbalance positions, so it would have lower imbalance costs.