[/caption]It is not like the leverage buyouts we saw in the nineties, but Blackstone’s buying of Dynegy harkens back to the past. This time it is not egos driving the buying culture, but the economic times, where private Equity giants, like Blackstone are taking advantage of the low interest rates and the bargains out there to be had. I suppose Dynegy was one of the low hanging fruits out there and the powers at Blackstone deemed it to be a good investment vehicle for its shareholders.
The price tag Blackstone is paying for Dynegy is $4.7 billion – it is ironic that the Houston based Dynegy once sought to buy the now defunct Enron. Dynegy’s stock holders are said to be happy because the shares had lost 74% in the last twelve months alone and with the news of sale of Dynegy, the stock price soared to 63%, closing at $4.53.
The New York Times is confirming that it is the weak economy, coupled with low prices for natural gas are the impetus for such sales like that of Dynegy to the Blackstone Group – this sale of Dynegy is also similar to the merger of Mirant and RRI Energy in April. Some of the details of the Blackstone deal to purchase Dynegy include: $543 million in cash; $4.50 for each stock to Dynegy’s shareholders; and the sale of four of Dynegy’s gas plants to NRG Energy for $1.36 billion, but only contingent upon the Blackstone’s leverage buyout of Dynegy.
The proposed deal of purchasing Dynegy is the biggest leverage buyout for the year and the deal is the biggest for Blackstone since its $27 billion takeover of the Hilton Hotel in 2007. It must be noted that under the current deal between Blackstone and Dynegy, the latter has what they call 40- day “Go Shop” clause, which allows Dynegy to find a better suitor willing to pay more for its assets.
Via NY Times.
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