Power producer Dynegy (NYSE:DYN) reached a deal on Wednesday to be acquired by billionaire activist investor Carl Icahn for about $655 million.
Dynegy, which last month had a takeover bid by private-equity giant Blackstone (NYSE:BX) blocked by Icahn and other shareholders, said it will continue to solicit superior proposals until its January 24 deadline.
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The $5.50-a-share purchase price from Icahn represents a 10% premium to Dynegy’s closing price over the last 30 trading days and is 10% above Blackstone’s bid.
Icahn, through his Icahn Enterprises LP, already owns about 9.9% of Dynegy’s stock. Icahn will commence a tender offer for outstanding shares of Dynegy that he does not own no later than December 22.
Hurt by soft power prices in recent years, Dynegy has struggled to escape its heavy debt load of about $3.95 billion.
“We believe the IEP offer, coupled with our continued ability to solicit superior proposals and the commitment of IEP to support a company accepted all cash offer for 100% of the company, is a very positive outcome for all Dynegy stockholders,” Dynegy CEO Bruce Williamson said in a statement.
Icahn Enterprises also pledged that, “in certain circumstances,” if a “superior” all-cash offer is made and supported by Dynegy, it will through its weight behind it as long as it does not wish to top it.
“All stockholders should benefit from the auction process which has now begun at a price which is 10% higher than the last bid,” Icahn said in the statement.
Shares of Dynegy responded well to the announcement, rising 3.49% to $5.64 Wednesday morning.