UPDATE: Clockwork Home Services Sold to Direct Energy
Direct Energy, an integrated energy and services company in North America and a subsidiary of Centrica plc, announced on June 10 its intention to acquire the assets and business of Clockwork Home Services Inc.for $183 million. The transaction, which remains subject to certain customary conditions including approval by regulators in the United States and Clockwork’s shareholders, is expected to be completed by July 1, 2010.
Direct Energy Services and Clockwork Home Services will combine to become the largest provider of heating and cooling, plumbing, and electrical services to more than 3 million households annually in North America.
“The combination of Direct Energy and Clockwork Home Services brings together two of the strongest and best home services businesses in North America to create the category leader with network revenues of almost $4 billion. With our size and coverage across virtually every state and Canadian province, we will transform the home services [HVAC, plumbing, electrical] industry to bring homeowners’ exceptional customer service and value,” said Eddy Collier, president, Direct Energy Services.
Jim Abrams, CEO of Clockwork Home Services, said, “This has been in process for a little while now, so we are very excited to announce the combining of our two great companies. Clockwork has had substantial growth over the last decade, and we have been successful in executing our long-term business plan of moving contractors from affinity groups into franchises. Our three franchise brands are now the fastest growing brands in North America for technical home services. Combined sales of One Hour Heating and Air Conditioning®, Benjamin Franklin Plumbing® and Mister Sparky® is approaching half a billion dollars.
“Capital was the great constraint for us going forward. Eddie Collier engaged me late last year in conversation to ensure the continued great growth of both our companies. Direct Energy brings us access to customers, capital, and sophisticated management that will help us continue to grow. Their knowledge of home services agreements is much stronger than ours, so we are very excited for the future. Our franchisees and employees have been very supportive as we began notifying them of the change,” said Abrams.
Collier said, “We are incredibly thrilled because we have 8.5 million service agreements in the United Kingdom (UK) and would very much like to see the North American market move in that direction. We feel that with Clockwork’s presence in this market, we are ensured of tremendous success.”
“The addition of Clockwork Home Services to our services business helps deliver on Direct Energy’s growth strategy of being North America’s leading integrated energy and services company,” noted Chris Weston, president and CEO, Direct Energy. “This acquisition will also allow us to increase the proportion of households that Direct Energy serves where we can offer both services and energy supply, with the opportunity to increase our integrated offerings through new Clockwork franchises.”
The combined organization will operate in almost every state and Canadian province, providing repair and maintenance services to customers’ heating and cooling systems as well as energy efficiency related services to both homes and businesses. Clockwork’s brands, customer service, and customer management systems complement Direct Energy Services’ strong maintenance and service plan product offering and market leadership in Canada. Direct Energy has 8.5 million service agreements in place in the UK. The new organization will also focus on obtaining state, provincial, and federal energy efficiency funding that is widely available to help make North American homes more energy efficient.
According to Abrams, One Hour Heating and Air Conditioning, Benjamin Franklin Plumbing, and Mister Sparky franchisees and owned operations, and Clockwork’s affinity clients, will benefit from Direct Energy’s experience in the home services industry as well as the financial support and UK energy services market expertise of its parent company, Centrica plc.
“Direct Energy’s 5 million customer relationships in North America and access to capital markets is critical to ensure the continued growth and investment in Clockwork’s highly-successful brands and franchises,” said Abrams. “I am committed to personally ensuring a cornerstone of the combined organization continues to be helping owned-operations, franchises, and affinity clients rapidly expand their businesses.”
The Clockwork affinity client groups include: Plumbers’ Success International®, AirTime 500®, and Electricians’ Success International®.
“Huge benefits to our affinity members will become available,” said Abrams. “For example, our combined purchasing power will open up many new opportunities. The shared technology that will be driving our business will also benefit our affinity members. Some of our largest affinity members, who did not wish to become franchises, still had strategic needs that were not necessarily being met, such as long-term exit strategies. Such opportunities will now open up with the increased capital strength of our company, and it also opens up many more customer development opportunities.”
Clockwork Home Services will still be managed from Sarasota, Fla.