Drax soars 15% by midday after confirming plans to buy Opus Energy

Drax

Drax (LON:DRAX) shares were being snapped up by investors this morning after confirming to the market the proposed acquisition of Opus Energy Group Limited (Opus Energy) for £340m and an agreement to purchase four Open Cycle Gas Turbine (OCGT) development projects.

Drax outlined in their half year results this morning that the company has been exploring options to improve earnings and longer term growth after announcing full year EBITDA to be around the bottom of the range of market forecasts. A key aspect of this is looking to improve diversification across the markets in which it operates; pellet supply, generation and retail.

Dorothy Thomson, Chief Executive Office of Drax Group said “Drax is already playing a vital role in helping change the way energy is generated, supplied and used as the UK moves to a low carbon future. Today we are pleased to announce the proposed acquisition of Opus Energy, the UK’s leading challenger retail supplier in the SME market, creating a strong and competitive presence complementing our existing Haven Power offer.”

Thomson went on to say “With the right conditions, we can do even more, converting further units at Drax to use sustainable biomass in place of coal. This is the fastest and most reliable way to support the UK’s decarbonisation targets, whilst minimising the cost to households and businesses. These initiatives mark an important step in delivering our strategy, contributing to stronger, more predictable, long-term, financial performance, through greater diversification of the businesses, delivering more opportunities right across the markets in which we operate.”

At the beginning of 2014 Drax shares were trading north of 800p a piece and were trading at lows ot 205 in January of this year, whilst confirming fully tear earnings to be below market forecasts the announcement of the Opus deal has seen the shares rally to 320p up over 15% on the day.

 

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