Britain's largest coal power producer also announced the purchase of four gas stations in a continued move away from its coal legacy.
Drax is paying £340mln for Opus, the UK's sixth biggest business energy provider, which supplies electricity and gas to more than 260,000 UK locations.
The FTSE 250-listed group said the acquisition will enhance its retail offering by combining the leading "challenger" small and medium enterprise business supplier with the strength in the industrial and commercial market of its existing unit, Haven Power.
The combination of Opus will Haven will create Britain's fifth-biggest business energy retailer.
Drax said the acquisition will be fully funded through a new £375mln debt facility.
The group, however, added that the Opus deal is subject to the European Commission approving a UK government CfD contract to support the conversion of one of its coal units to running on biomass.
Utility services provider Telecoms Plus, which currently owns a 20% stake in Opus Energy, said it expects to make an exceptional profit of approximately £60mln during the current financial year from the sale.
In addition, Telecom Plus said its share of Opus profit in the current financial year up to the date of completion is expected to amount to approximately £5mln. Last year it contributed £5.6mln.
As it outlined in its half year results at the end of July, Drax has been exploring options to “further improve earnings quality and deliver targeted long-term growth, evaluating opportunities to diversify across the markets in which it operates.”
The group today also announced an agreement to acquire four Open Cycle Gas Turbine (OCGT) development projects for electricity generation, with a capacity of around 1.2 gigawatts from Watt Power, a unit of Noble Group Ltd.
It said the initial purchase price for all four developments is £18.5mln, with the total consideration payable dependent on the clearing price in future capacity market auctions.
Drax added that it is also continuing to monitor opportunities to acquire further wood pellet plants.
Dorothy Thompson, chief executive officer of Drax Group, said: “These initiatives mark an important step in delivering our strategy, contributing to stronger, more predictable, long-term, financial performance, through greater diversification of the businesses, delivering more opportunities right across the markets in which we operate.”
She added: "We are pleased that five of our leading shareholders representing over 45% of the issued share capital have indicated that they will support the (Opus) transaction, and we thank them for their support.”
Drax, whose huge power plant in Yorkshire was once Europe's most polluting coal plant, has been converting its coal-fired station to biomass, but a government decision to cut subsidies for renewable energy has hampered this strategy.
This triggered a strategic review last year by the group, with today’s announcements showing the power producer shifting its focus to supplying energy to end-consumers and providing back-up electricity to complement growing wind and solar power output.
John Musk, managing director of European utilities research at RBC Capital Markets, said: "We see today's announcement as a clear positive which goes a long way to addressing some of the concerns that underpin our 'Underperform' recommendation (on Drax shares).”
In reaction to the deals, Drax shares rose 12% to 310.5p.
But analysts at Jefferies International were more cautious, pointing out that the price Drax is paying for Opus looked a little high
It also noted that Drax updated its full-year guidance for 2016 as well today, forecasting underlying earnings (EBITDA) at the low end of the market’s £135-169mln consensus range as a result of the CfD contract not yet being approved.
The Jefferies analysts said: “In essence, today’s update will we see Drax evolving away from its traditional commodity exposed business towards a more diversified and integrated model.’
But they added: “The (Opus) acquisition multiple is 10 times enterprise value/EBITDA which, in our view, does not stand out as considerably cheap.
‘Secondly, this is the first time that the company is making a step into the SME retail market, therefore it remains to be seen whether Drax has the necessary expertise to manage this successfully.”
-- update for share price --