Walsall-based HomeServe buys US home protection firm
HomeServe is continuing its growth in the United States by buying a home protection business operating across 16 states.
The Walsall-based home repairs and improvements business, through its subsidiary HomeServe USA Repair Management, has entered into an agreement to buy the business of Dominion Products and Services, a subsidiary of Dominion Energy, for £108.3 million.
The acquisition of Dominion Products and Services, based in Richmond, Virginia, will accelerate the growth of HomeServe's North American business.
To fund this transaction and retain balance sheet strength, HomeServe has separately announced its intention to raise up to £125m by way of a cash placing shares issue.
The addition of Dominion brings a growing customer base of 500,000 customers and 1.1 million policies, and will provide HomeServe with access to 7.1 million additional households, including those of Dominion Energy under a long term marketing agreement.
Tom Rusin, chief executive of HomeServe in North America, said: "This agreement with Dominion is another major step forward for HomeServe. It gives us the opportunity to add a significant number of customers, policies and new partner relationships that are complementary to our existing business. We have demonstrated over the last few years that we are capable of growing our business both organically and through utility policy book acquisitions. This is largely due to our relentless focus on the customer experience, which we believe is second to none in the home assistance marketplace."
HomeServe founder and group chief executive Richard Harpin said: "We have an ambitious but well-grounded growth plan for our North American business which envisages generating adjusted operating profits of US $160 million in the medium term. The acquisition of Dominion Products and Services' business brings forward the achievement of our North American targets by at least 12 months. We are assessing an exciting pipeline of further opportunities, and today's equity placing retains the balance sheet strength we want to deliver today's transaction and additional future growth across all of our businesses."
HomeServe had a good first six months of its financial year to the end of September and remains on track to deliver further strong growth.
Group revenue rose 17 per cent to £366m and pre-tax profit was £21m – down five per cent from £22m a year before.
"We have made excellent progress in the first six months of this financial year, with continued investment for growth in our UK business and progress with key partners in France, Spain and Italy," added Mr Harpin.