Hess to sell Energy Marketing unit to UK's Centrica for $1.03 billion
(Reuters) - Hess Corp (HES.N) said it would sell its Energy Marketing unit to British utility Centrica Plc (CNA.L) for about $1.03 billion as part of its plan to focus on exploration and production.
Centrica's North American subsidiary, Direct Energy Business, will buy the business, which supplies natural gas and electricity, for $731 million in cash plus about $300 million in working capital.
Hess announced plans to sell or exit its retail gasoline and trading businesses, as also its marketing business, after activist investor Elliott Management began a campaign in January to break up the company.
The sale of the marketing business, along with sales of four producing assets earlier, brings total sales this year to $4.5 billion, Hess said in a statement on Tuesday.
The sale of the marketing business, expected to close in the fourth quarter, will help to begin buying back shares under its existing $4 billion repurchase plan, the company said.
Hess settled its battle with Elliott in May by placing three directors backed by the hedge fund on its board.
The energy marketing business serves 23,000 commercial, industrial and small business customers in 18 states in eastern United States and will help Centrica expand its presence in North America.
Hess' Energy Marketing business is expected to report about $200 million in EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) this year.
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