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Wednesday, 5 December, 2001, 14:29 GMT
Centrica agrees Enron deal
Enron's HQ in Houston
Many Enron staff will be shed as the firm restructures
British utility Centrica has struck a deal to pay 96.4m for the European retail arm of stricken US energy firm Enron.

Centrica beat off competition from Electricite de France and Britain's Innogy to buy Enron Direct from administrators PricewaterhouseCoopers.

In our view, Centrica has moved quickly to acquire a sound business at a very low price. The strategic fit is good

Andrew Wright, UBS Warburg

Enron Direct markets power to some 160,000 European customers, mainly in the UK.

The deal is a step towards salvaging some sort of future for Enron, which on Monday secured $1.5bn in funding from creditors to help it through restructuring.

But the bulk of Enron's European operations still face an uncertain future.

Big ambitions

Centrica, formerly the UK supply business of British Gas, is the UK's largest domestic gas supplier and moved into the electricity market several years ago.

The purchase almost doubles Centrica's UK customer base.

"This provides an ideal platform for advancing our plans for the commercial market," said Mike Alexander, managing director of Centrica's division British Gas Trading, in a statement.

The deal also gained City approval, and was applauded as "excellent" by UBS Warburg analyst Andrew Wright.

"In our view, Centrica has moved quickly to acquire a sound business at a very low price," Mr Wright said.

"The strategic fit is good and there are additional load profile benefits for energy trading."

Enron Direct has the bulk of its business in the UK, but recently launched operations in the Netherlands and Spain - subsidiaries that may not be covered by the Centrica deal, which only relates to certain assets of the firm.

Enron Direct employs 219 people in the UK, mostly in Oxford, and Centrica has not yet confirmed whether all staff will retain their jobs.

In the City, Centrica shares stood 0.75p higher at 218p in afternoon trade on Wednesday.

Uncertain future

The deal still leaves most of Enron's European assets in the hands of the administrators.

Enron Europe went into administration on 29 November, three days before its US parent filed for Chapter 11 bankruptcy.

PricewaterhouseCoopers is looking for buyers for the company's various operations, which include power stations, Wessex Water and a substantial trading arm.

Electricite de France has been tipped as a buyer for Enron's Teesside power station, as have its existing partners in the plant, Northern Electric, Midland Electricity and Western Power Distribution.

Most of the staff at Enron's European headquarters in London still face redundancy, administrators admit.

British Gas Trading's Mike Alexander
"We bought the assets and the energy customer base"
Bill Lerach, Amalgamated Bank lawyer
alleges Enron officers damaged the retirement prospects of its employees
See also:

05 Dec 01 | Business
Enron debacle forces audit rethink
04 Dec 01 | Business
Enron wins breathing space
03 Dec 01 | Business
Firms admit $4bn Enron exposure
03 Dec 01 | Business
Enron files for bankruptcy
05 Oct 01 | Business
Q&A: Bankruptcy made simple
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