Dynegy has signed an agreement to merge with Vistra Energy, the parent company for TXU Energy and Luminant, in an all-stock deal to create an integrated power company in the US.
The new combined entity is estimated to have more than $10bn of combined market capitalization and a combined enterprise value more than $20bn.
As per the agreement, shareholders of Dynegy will receive 0.652 shares of Vistra Energy for each share held.
Vistra Energy president and CEO Curt Morgan said: "Combining Vistra Energy's leading retail and commercial operations with Dynegy's leading CCGT fleet and geographically diverse portfolio is expected to create a company with significant earnings diversification and scale.
“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.”
The deal is part of Dynegy’s effort to strengthen balance sheet while creating the preeminent integrated power company.
Dynegy president and CEO Bob Flexon said: "Vistra Energy's strength in retail combined with Dynegy's infrastructure and generation capabilities will provide an unmatched, highly efficient integrated business in key competitive markets.”
Upon completion of the deal, Vistra Energy will have approximately 79% stake in the combined company, which will be based in Irving, Texas, while Dynegy shareholders will own 21%.
The combined company, which will own approximately 40GW of installed generation capacity, will serve around 2.9 million retail customers.
Expected to be completed in the second quarter of 2018, the deal is subject to certain regulatory approvals, including approval by the Federal Energy Regulatory Commission, the Federal Communications Commission, the Public Utility Commission of Texas, the New York Public Service Commission, and other customary closing conditions.
Image: The new integrated power company will own approximately 40GW of installed generation capacity. Photo: courtesy of xedos4/FreeDigitalPhotos.net.