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Utilities acquisition hits the target – and generates hefty savings

Find out how Third Horizon’s utilities and mergers integration expertise helped guide a major investment bank’s successfully acquisition of a gas distribution business – and identified 30 per cent savings in operating costs...

Background
A major investment bank committed to a program of growth in its infrastructure assets in the UK and Europe sought Third Horizon’s assistance to assess the potential purchase of a series of gas distribution businesses from British Gas.

Our Role
We comprehensively reviewed and quantitatively benchmarked all the distribution operations to develop a comprehensive operating cost forecasting model and a detailed project profit and loss statement.

We reviewed the proposed service agreements between British Gas and the acquisition targets, and identified a target entity through an assessment of cost reduction and value creation opportunities. We conducted a synergy analysis to assess the potential for a multi-acquisition scenario, including operational cost reductions and improvement opportunities.

A business is only as good as its people, so we assessed the managerial competence of the target. We then developed a comprehensive strategy for the targeted entity including new organisation structure, management team, IT architecture, and strategy and implementation program.

Results
The bank successfully purchased – and still owns – the targeted gas distribution business. Our cost reduction and value creation assessment identified total operating cost savings of 30 per cent.

Additional information