Dynegy, Blackstone deal on the ropes

Houston, Texas. November 23, 2010. It appears that the Dynegy takeover has flatlined this Nov. 23. It’s close to being declared dead.

Originally, the company, one of the largest independent power makers in the U.S., was being eyed for takeover by Blackstone Group for a $600 million price tag. Due to shareholder opposition—there was some balking at the proposed $5-a-share offer—Blackstone is expected to officially pull its offer for Dynegy later today.

Unofficially, it was not expected that the offer would get Dynegy stakeholder approval in the final vote this afternoon since both Carl Icahn, the company’s billionaire investor, and Seneca Capital, the hedge fund, are opposed. (They are the company’s two largest shareholders.)

The death call on the takeover will come down later today from both sides of the proposed deal, analysts say. And, it’s expected that Dynegy will seek new bids.

In a prepared statement, Blackstone’s Senior Managing Director David Foley said, “While we are disappointed by Seneca Capital’s and Carl Icahn’s opposition to our ‘best and final’ proposal of $5.00 per share, we appreciate the efforts made by Dynegy to communicate the merits of our offer, and we extend best wishes to Dynegy as it continues to pursue its exploration of strategic alternatives.”

Market Watch is reporting a 4% fall in Dynegy shares today because of the news.

Dynegy Inc. announced over a week ago that its special meeting of stockholders had been recessed until 3:30 p.m. central time on November 23, 2010 in order to provide stockholders the opportunity to fully consider the terms of the November 16, 2010 amendment to the previously announced merger agreement, dated as of August 13, 2010, providing for the acquisition of the company by Denali Parent Inc., an affiliate of The Blackstone Group.

Dynegy’s Board of Directors believed that the 11 percent increase in the merger consideration, to $5.00 in cash per share, was a very important development that Dynegy stockholders should have an opportunity to consider before there is a vote on both the merger proposal and, if necessary, the proposal to adjourn the special meeting to solicit additional votes for the merger proposal.

The Dynegy Board, at that time, recommended that all Dynegy stockholders approve the transaction with Blackstone.

The Board noted that “the Blackstone transaction is in the best interest of all Dynegy stockholders because it provides immediate, certain and fair value to its stockholders while reducing the considerable downside risk facing Dynegy if the Blackstone transaction is not approved and completed.”

 

 

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