Acquisition

Agreement with National Grid USA

Acquisition of service contract business and signing of 10 year marketing agreement

HomeServe plc ("HomeServe") today announces the further expansion of its international operations and the development of its US business with the acquisition of National Grid Energy Services' ("NGES") service contract business ("the Contract Business") from National Grid Energy Services LLC. Home Service USA has also entered into a marketing agreement with National Grid USA to use the National Grid Energy Services name. National Grid Energy Services is a subsidiary of National Grid USA, one of the largest utilities in the US serving 6.7 million customers including over 5 million residential households. 

Acquisition of the Contract Business

The Contract Business provides heating, cooling and water heater repair services to residential customers across four northern US states comprising Massachusetts, New Hampshire, New York and Rhode Island. The business has 365,000 annual service contracts across 186,000 customers and delivers its services through a network of directly employed repair technicians and operations support personnel. These employees will remain with the companies that Home Service USA is acquiring as part of the transaction.

The acquisition provides our US operations with a robust and profitable platform to support further business development in the region as well as a significant increase in the scale of our operations in terms of both customer and policy numbers and claims handling capability.

In the year to 31 March 2009, the contract business generated profit before tax of $6.3 million (£4 million) and as at 30 September 2009 had gross assets of $7.2 million (£4.5 million).

The net consideration payable on completion is expected to be approximately $14 million (£9 million), with gross consideration of $30 million (£19 million) reduced by net liabilities of approximately $16 million (£10 million). The consideration will be funded from existing facilities.

10 Year Marketing Agreement

Home Service USA has also entered into a 10 year marketing agreement with National Grid USA. This will allow Home Service USA to use the National Grid Energy Services brand to market home assistance policies to over 5m households across National Grid's US service areas. The agreement allows us to continue to develop our policy business and significantly increases our footprint of affinity partner households in the US to over 15 million.

Completion process and timeline

Completion of the transaction is expected to take place within 120 days.

Jonathan King, Chief Executive Home Service USA commented:

"This is a transformational acquisition for Home Service USA, bringing us a long term marketing opportunity to over 5m households, a significant increase in customers and contracts and a high quality group of employees. It accelerates our growth in the US and further establishes us as the leading provider of home emergency solutions to utility customers with over 1.1 million contracts."

Richard Harpin, Chief Executive of HomeServe plc commented:

"We are delighted to announce this acquisition and marketing agreement which represents a significant step forward in the development of our US operations and reflects our strategy of expanding our international businesses through a combination of organic growth delivered by additional affinity partnerships and selective acquisitions. I am looking forward to working with National Grid as we continue to build a successful home assistance business in the US".

A conference call for analysts will take place at 8am this morning, dial-in details for which can be obtained from Tulchan.

14 April 2010

Enquiries:

HomeServe plc

Richard Harpin, CEO

Martin Bennett, CFO

Mathew Wootton, Director of Finance Tel: 01922 655 332

Tulchan Group

Andrew Honnor Tel: 020 7353 4200

Stephen Malthouse