For a company that has not strung together consecutive years of positive free cash flow in over a decade, Dynegy (NYSE:DYN) is a surprisingly hot commodity. Having rebuffed two bids from Blackstone (NYSE:BX), this independent power producer now has a bid in hand from Carl Icahn's Icahn Enterprises LP (NYSE:IEP).
The Deal In Hand
Icahn Enterprises is offering $5.50 per share in cash for Dynegy ($660 million), and will take on Dynegy's nearly $4 billion in debt as well. Curiously enough, the buyer agreed to allow Dynegy to seek out yet another better bid, giving the company until late January to find a better offer. Shareholders already seem to be counting on the idea that someone will make a competing bid, as the shares are currently trading a bit higher than that $5.50 deal price.
Icahn Enterprises is offering $5.50 per share in cash for Dynegy ($660 million), and will take on Dynegy's nearly $4 billion in debt as well. Curiously enough, the buyer agreed to allow Dynegy to seek out yet another better bid, giving the company until late January to find a better offer. Shareholders already seem to be counting on the idea that someone will make a competing bid, as the shares are currently trading a bit higher than that $5.50 deal price.
Ultimately, then, it seems like justification for Dynegy's refusal to close the deal with Blackstone. To be fair, it was not Dynegy's management or board that had the problem; they signed off on the deal. Rather, it was major shareholders of Dynegy, including Seneca Partners and Icahn, that balked at the price. While Blackstone did up its $4.50 bid to $5.00 in November, that still was not enough, and the transaction ultimately fell apart as Blackstone walked away.
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