Centrica pulls out of merger with Enron spin-off

British energy supplier Centrica has terminated its merger agreement with US company NewPower Holdings because of concern that NewPower may have liabilities related to the collapse of its former parent, American energy giant Enron.

Centrica, the supply arm of British Gas and Scottish Gas, cited Enron’s failure to obtain an order from the bankruptcy court enjoining claims against NewPower for liability it potentially may have as a result of its membership for a short time in the Enron consolidated tax and benefits groups.

Earlier, Centrica and NewPower signed a merger agreement under which Centrica’s Windsor Acquisition unit began on March 1 an all-cash tender offer for all of NewPower’s outstanding common stock at dlrs 1.05 a share.

It was subject to possible adjustment in accordance with the merger agreement.

Centrica and Windsor say they do not intend to purchase shares of NewPower stock in the tender offer.

The tender offer was scheduled to expire at midnight (5am Irish time today).

Centrica and NewPower have agreed to hold discussions to determine whether an offer to NewPower to purchase business assets, rather than common stock would be a viable alternative.

Enron was attempting to sell its 44% stake in NewPower to Centrica for $56.5m (€64.8m). Bankrupt and non-bankrupt Enron entities were to have received $98.1m (€112m) to settle obligations under commodities contracts under the sale.

Shares of NewPower were halted yesterday on Nasdaq at 37 cents, down 45 cents, or 54.9%.