HomeServe plc Acquisition of Utility Service Partners Inc

• Acquisition of leading home assistance business with over 300 partners and 0.4m customers across the U.S. and Canada
• HomeServe's largest single step in U.S. expansion, increasing total footprint by 9.4m households to over 40m households
• Significant new marketing opportunities and growth potential through further penetration and partner expansion

HomeServe plc, the international home emergency business, today announces it has entered into an agreement to acquire Utility Services Partners Inc (USP) for $75m in cash on a "debt free cash free" basis at completion, which is expected to occur within three to four months following certain ordinary course regulatory approvals.

USP is a leading provider of home assistance service line repair contracts in the U.S. and Canada throughpartnerships with a number of municipalities and utility companies.  USP is also the only warranty company partner of the National League of Cities (NLC), an organisation dedicated to helping city leaders build better communities.  NLC is a resource and advocate for 19,000 cities, towns and villages across the United States. 

Founded in 2003, USP has successfully developed relationships with over 300 partners.  Through these partnerships USP has access to over 9.4m households across the U.S., providing HomeServe with significant new marketing opportunities and increasing HomeServe's footprint of partner households in the U.S. to over 40m.

USP has 0.4m customers with the number of home assistance contracts totalling 0.6m and retention rates consistent with those experienced within HomeServe USA.  USP's core products, representing 80% of its existing contracts, are water and sewer line coverage.  HomeServe sees significant opportunities to improve the current penetration rate and provide customers with access to the broader range of HomeServe's products and services.

USP has 70 employees at its main office in Pennsylvania and a small facility in Florida, while repair services are provided through a network of sub-contractors.  For the year ended 31 March 2015, USP's turnover was $30.9m (£19.2m) and adjusted EBITDA was $2.7m (£1.7m).

Following completion of the acquisition, HomeServe will continue to manage USP from its current headquarters in Pennsylvania.  In FY18, the first full year of ownership, we expect EBITDA to be enhanced by around $15m, while in FY17, due to increased marketing investment and transaction costs we expect the transaction to be earnings neutral.  HomeServe will fund the cash consideration at completion from the group's existing finance facilities.

Tom Rusin, Chief Executive of HomeServe USA commented:

"This is a significant step forward for our business.  The combination of HomeServe USA and USP represents a unique opportunity for us to access over 300 new partners across the United States, particularly municipal entities.  Our combined business will serve over 2.7m customers and have access to over 40m households with a partner brand."

Richard Harpin, Group Chief Executive of HomeServe commented:

"I am delighted with the progress of our business in the U.S., which now accounts for over a third of our global customers.  This is the largest acquisition that we have made since entering the U.S. market in 2003 and will accelerate our growth, both in the U.S. and the Group."

Clarence E. Anthony, CEO and Executive Director of the National League of Cities (NLC) commented:

"The National League of Cities (NLC) is excited to continue working with the newly-combined HomeServe USA and USP as our partner for NLC's Service Line Warranty Program.  Together, we are committed to providing quality and affordable home utility line protection to cities and their residents across America."

HomeServe will announce its preliminary results for the year ending 31 March 2016 on 24 May 2016.