Vistra Energy to acquire Dynegy in $1.7B all-stock deal
A Wall Street Journal report last week caused Dynegy’s stock price to surge, as details emerged that the deal with Vistra was close. The deal was initially reported to be in the works back in May. The deal is another sign of consolidation among independent power producers under pressure from a variety of sources, including cheap natural gas and renewable energy.
While the companies emphasized their natural gas-fired generation in the announcement, both have significant coal resources.
Under the terms of the agreement, announced this morning, Dynegy shareholders will receive 0.652 shares of Vistra common stock for each share of Dynegy common stock they own. The swap will result in Vistra Energy shareholders owning about 79% of the combined company, and Dynegy shareholders owning 21%. Based on Vistra closing price of $20.30/share on Oct. 27, the companies said Dynegy shareholders would receive $13.24/share.
The companies say Dynegy’s generation capacity and retail footprint, combined with Vistra’ integrated model in Texas, “is expected to create the lowest-cost integrated power company in the industry” and will “position the combined company as the leading integrated retail and generation platform throughout key competitive power markets in the U.S.”
The combined company will serve approximately 240,000 commercial and industrial customers and 2.7 million residential customers, with estimated retail sales of 75 terawatt-hours in 2018.
Vistra Energy President and CEO Curt Morgan called the deal a “transformative opportunity” for the two companies.
“The resulting combined enterprise is projected to have the lowest-cost structure in the industry and will benefit from weather and market diversification that, when combined with Vistra Energy’s balance sheet strength, will provide a platform for future growth,” Morgan said in a statement. “The result will be a leading integrated power company with significant scale in the key U.S. competitive markets.”
