HomeServe expands US footprint with USP acquisition

HomeServe was looking to add another 10m homes to its US market on Thursday, announcing it had entered an agreement to acquire home assistance business Utility Services Partners.

The FTSE 250 home emergency business said the acquisition was worth $75m (£52.3m) cash on a ‘debt free cash free’ basis at completion, which was expected to occur within three to four months following regulatory approvals.

HomeServe’s board said USP was a leading provider of home assistance service line repair contracts in the US and Canada through partnerships with a number of municipalities and utility companies.

It confirmed USP was also the only warranty company partner of the National League of Cities - a group which represents 19,000 cities, towns and villages in the United States.

"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,” said HomeServe USA chief executive Tom Rusin.

“Our combined business will serve over 2.7m customers and have access to over 40m households with a partner brand."

The acquisition had access to 9.4 million customers through more than 300 partners, which would expand HomeServe’s footprint of partner households in the US to more than 40 million.

HomeServe’s board also said it saw significant opportunity to improve USP’s current penetration rate, with 0.4 million customers signed up to USP at present.

Following completion of the acquisition, HomeServe said it would continue to manage USP from its current headquarters in Pennsylvania.

In the first full year of ownership - FY18 - EBITDA was expected to be enhanced by around $15m, while the transaction would be earnings neutral due to increased marketing investment and transaction costs.

HomeServe would fund the cash consideration at completion from its existing finance facilities.

Richard Harpin, group chief executive of HomeServe, said he was delighted with the progress of the US business, which now accounted for more than one third of its 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.”