Noble Group buys Sempra Energy Solutions

Noble Group strikes a deal to buy Sempra Energy Solutions for $582 million in a move shareholders applaud.

Hong Kong-based commodities trading company Noble Group is buying Sempra Energy Solutions for an enterprise value of $582 million in a deal welcomed by Noble shareholders.

Sempra Energy Solutions is part of a 50:50 joint venture between the Royal Bank of Scotland (RBS) and Sempra Energy, which operates under the name of RBS Sempra Commodities. RBS acquired its stake in early 2008 and the sale is being driven by the need for RBS to recapitalise after receiving a bailout package from the UK government.

The transaction is part of a programme to sell all of RBS Sempra Commodities' businesses. The first phase of the programme was completed in July 2010 with the sale to J.P. Morgan Chase of the joint venture’s global metals and oil businesses, as well as the European natural gas and power businesses, for around $1.6 billion. RBS Sempra Commodities is also in advanced negotiations for the sale of its North American wholesale power and natural gas business and related assets.

"The sale of the Sempra Energy Solutions business line out of our JV with Sempra Energy represents another step in the divestiture of this asset, as agreed with the European Commission,” said Bruce Van Saun, RBS group finance director, in a written statement. “Noble represents a strong strategic fit and a good home for this business.”

The purchase price comprises a $317 million cash payment and $265 million of debt on the books of Sempra Energy Solutions, which Noble will assume.

San Diego-based Sempra Energy Solutions is the North American retail power, energy and electricity marketing arm of RBS Sempra Commodities. It is the fifth largest non-residential power marketing company in the US and had sales of over $1.6 billion in 2009. Sempra Energy Solutions currently has 200 employees. It has a focus on larger retail customers and its 1,400 customers include commercial, industrial and municipal customers across 16 states.

Noble already has a working relationship with Sempra Energy and the deal adds scale to its energy platform. It intends to rename the company Noble Americas Energy Solutions. Noble expects to benefit from marketing synergies and its ability to build upon the infrastructure and systems of Sempras Energy Solutions. The transaction is expected to close during the fourth quarter of this year.

Noble Group is listed on the Singapore Exchange (SGX). It currently operates from over 150 offices and plants in 38 countries. In the first half of 2010, it had revenues exceeding $24 billion. Shareholders clearly viewed the acquisition positively as Noble shares gained 8.4% on the SGX to close at S$1.94 ($1.46) yesterday, when they resumed trading after the deal was announced.

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