Direct Energy, one of North America’s largest energy and services companies and a subsidiary of Centrica plc, is selling Clockwork, and certain of its affiliates (“Clockwork”) to Authority Brands, a home services franchise platform backed by funds advised by Apax Partners for $300 million. Clockwork consists of over 725 franchise territories, and 10 company-owned stores, and brands including One Hour Heating & Air Conditioning®, Benjamin Franklin Plumbing®, Mister Sparky® electric, BuyMax, Success Academy and SuccessWare 21.
Direct Energy acquired Clockwork in 2010 for $183 million. Since then, awareness of the home services brands, One Hour, Benjamin Franklin and Mister Sparky has grown in North America. However, Centrica’s consumer strategy has evolved, with an increased focus on developing ongoing customer relationships through home protection plans and home warranty offers, and on developing its own home services brands and driving simplification and focus in the scope of services it delivers to customers. The sale price represents an attractive multiple of Clockwork’s 2018 EBITDA.
“Direct Energy will focus on building ongoing relationships with our customers and continue to deliver growth through both energy and a broader network of home service providers, as well as expanding our home protection plans and home warranty offers," said Bruce Stewart, president of Direct Energy Home North America. "The decision for this sale reflects our goals to focus and simplify our channels to customers and to own our own brands. Authority Brands is a good home for Clockwork and the franchise owners and customers will see no difference in our service delivery as we conclude this transaction.”
“The addition of the Clockwork group of brands is an important and significant step in the evolution of Authority Brands," said Rob Weddle, CEO of Authority Brands. "The One Hour, Benjamin Franklin and Mister Sparky brands are market-leading franchises within their respective industries and their addition to our portfolio doubles our overall system revenue to over $1 billion.”
“We are delighted to support Authority Brands with this transformational acquisition," said Ashish Karandikar, partner at Apax Partners. "The Clockwork brands operate in attractive markets and will bring scale and diversification to Authority Brands’ platform.”
“Clockwork has been a good business for Centrica since its acquisition in 2010,” said Mark Hodges, executive director and chief executive, Centrica Consumer. “The sale of the Clockwork portfolio is aligned with our intention to drive channel and brand rationalization across the Group, with a continued focus on efficiency, effectiveness, quality and simplification. I am pleased we have found a good home in Authority Brands and wish the Clockwork business and its franchisees the best for the future.”
The sale is expected to close in the first half of 2019 and is subject to approval by U.S. competition authorities under the Hart Scott Rodino Act.