April 13 (Bloomberg) -- Energy Savings Income Fund, a trust that owns marketers with almost 1 million electricity and natural-gas accounts in North America, said it signed a preliminary agreement to buy competitor Universal Energy Group Ltd. for more than C$255 million ($208.3 million.)

The unit-for-stock transaction is valued at C$7.05 per share based on the C$12.16 closing price of Energy Savings units on April 9, the Toronto-based trust and Universal said today in statements. That’s a 3.8 percent premium above Universal’s April 9 closing price of C$6.79, after it rose 21 percent in two days.

“Market events have necessitated the release of the existence of our non-binding letter of intent,” Energy Savings Chief Executive Officer Ken Hartwick said in today’s statement. “The merger of two independent contractor sales forces in Canada as well as United States customer bases which do not overlap should be positive for growth.”

Owners of Universal would receive 0.58 unit of Energy Savings for each share, according to the statements.

Universal and Energy Savings sell natural gas and electricity to residential, small to mid-size commercial and small industrial customers in Canada and the U.S. Universal also rents out water heaters in Ontario and produces ethanol in Saskatchewan.

A final accord is subject to lock-up agreements by key Universal shareholders and due diligence, as well as board and regulatory approvals, Energy Savings said. Any agreement would include adjustment to the conversion feature of Universal’s outstanding 6 percent coupon debentures, according to the statement.

Those conditions must be satisfied or waived by 5 p.m. Toronto time April 19. Universal sold C$90 million of debentures, each convertible to 44.03 shares, in 2007.

Universal rose 1 cent to C$6.80 on the Toronto Stock Exchange. Energy Savings rose 36 cents, or 3 percent, to C$12.52.

To contact the reporter on this story: Jim Polson in New York at jpolson@bloomberg.net.

Last Updated: April 13, 2009 16:39 EDT