Seneca Capital LP is opposing a $5.50 a share bid by Icahn’ Enterprises to take Dynegy (DYN) private, while at the same time urging the utility company’s stockholders not to tender their shares, according to The Wall Street Journal.
Blackstone had agreed last month to a $5-a-share takeover of Dynegy, however the utilities’ shareholders rejected the bid after Seneca and Icahn argued the bid undervalued its assets.
Seneca and Icahn’s company are Houston-based Dynegy’s two largest shareholders, with stakes of 12% and 9.9%, respectively.
Last week, Icahn reached an agreement to buy Dynegy for $665 million, plus billions of dollars in assumed debt, with the tender offer starting no later than Dec. 22.
However, Seneca, which bought a 9.3% stake in Dynegy for $51.22 million in October, providing the investor with the right to “implement plans or proposals with respect to the issuer as a means of enhancing shareholder value,” according to an SEC filing, is now using the same strategy to pin Dynegy shareholders against Icahn’s bid.
While it says Dynegy is really worth about $6 to $7 a share, it believes its shares could rise to about $16 or $18 upon recovery, and advised Icahn to rework the offer.
Dynegy has suffered ailing earnings amid dwindling energy prices and lower electricity demand.
Before it initially announced the Blackstone bid, which Dynegy contended was its best bid at the time, the company said it had been searching for a suitor for at least two years.