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Telecom Plus joins the big boys with Npower deal

Big news in the under-fire energy providers sector, as the “Big Six”  is set to become the “Big Seven” after Telecom Plus announced a transformational acquisition.

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Telecom Plus (LON:TEP) claimed the “Big Six” group of energy providers is set to become the “Big Seven” after it announced a transformational acquisition.

The company is to pay £218mln for Electricity Plus Supply and Gas Plus Supply, both of which are owned by Npower, the energy supplier that this week was revealed to have the highest complaint rate among the “Big Six”, according to research by Consumer Futures. Npower is a subsidiary of German firm RWE.

Telecom Plus, which already supplies a wide range of utility services to both residential and business customers, said it will be able to take advantage of a new 20 year energy supply agreement with Npower as a result of the deal.

The group is raising £130mln to help fund the acquisition, through a share placing and open offer of shares at 1,475p a pop. The open offer will be available to Telecom Plus shareholders on the basis of one new share for every 35 shares currently held.

"This is a transformational deal for the company, delivering significant earnings enhancement, a revised and improved 20 year supply agreement with Npower and the opportunity for us to provide even more competitive energy prices to our customers in future. The combination of these will play a major role in helping us to accelerate our current rate of high quality organic growth and to achieve our goal of supplying our unique, multi-utility proposition to more than one million customers over the medium term," said Charles Wigoder, the executive chairman of Telecom Plus.

The acquisition and fund raising accompanied half-year results in which the company announced a 10.1% increase in underlying profit before tax to £13.7mln from £12.5mln the year before.

The interim divi has been whacked up 23.1% to 16p from 13p last year.

Shares in Telecom Plus hit a 52-week high of 1,743p on the news before easing back to 1,698.8p, up 12.7% on the day, at 9.00am.

Quick facts: Telecom Plus

Price: 1368 GBX

LSE:TEP
Market: LSE
Market Cap: £1.08 billion
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