AGL Acquires Retail Supply Customer Book

AGL disclosed in reporting earnings yesterday that its retail operations segment recently acquired a retail customer book in Illinois.

Specifically, AGL announced that on June 30, 2013 it had acquired approximately 33,000 residential and commercial natural gas customer relationships in Illinois. AGL said that these are natural gas commodity customers who opt for competitive service in the state

The identity of the seller of the customer book was not cited by AGL during its earnings call. A quick scan of its 10-Q did not indicate AGL revealed the seller either (it was not named in those sections specifically describing the transaction, but Matters could not read the entire 10-Q prior to publication to verify it was not mentioned elsewhere). An AGL media representative said that the company was not disclosing the seller at this time.

AGL paid $32 million for the block of customers, and expects the acquisition to add $0.02 to diluted EPS in 2013 and additional $0.04 in 2014.

"Effectively, we paid about three times forecasted 2014 EBITDA, and we are adding margin with very little additional operating expense," AGL executives said.

"The transaction significantly increases the size of our retail energy customer portfolio in Illinois with minimal incremental operating expenses. We expect this transaction to result in approximately $4 million of EBIT during 2013," AGL said in a 10-Q.

During Q&A on the earnings call, in response to a question specifically about the retail services (not supply) segment (warranty products, etc.), executives said that, "we really don't have any M&A aspirations across retail really beyond what we've done this year," further describing this year's transactions as opportunistic.

Aside from the recent retail supply customer book acquisition, AGL began the year by purchasing NiSource Inc.'s retail services business which included about 500,000 warranty/service customers.