Riverstone to buy generator Talen Energy, take it private for $1.8B
- Riverstone Holdings announced plans Friday to buy the remaining shares of independent power producer Talen Energy and take the company private. The deal prices the generator at $5.2 billion.
- The firm currently owns about 35% of Talen, which owns 16,000 MW of generation capacity in eight states. Riverstone will pay $14 per share for the stock it does not own, Bloomberg reports, a 56% premium on the closing price on March 31, the last trading day before reports of a potential sale.
- Talen was created in 2014 when Riverstone combined its generation assets with those of utility owner PPL Corporation. Since then, low power market and natural gas prices have squeezed revenues at the generator, whose fleet was about 40% gas, 40% coal, and 15% nuclear plants when it was formed.
Talen Energy went public only a year ago, when Pennsylvania-based utility PPL completed its spinoff of its competitive generation arm to focus on its regulated business.
Since then, low prices in interstate electricity markets have squeezed the company. More than three-fourths of Talen's fleet is in the PJM region, where energy efficiency measures and low natural gas prices pushed capacity prices below analyst expectations in a recent auction.
Talen's generation fleet is only about half the size of its larger rivals Dynegy and Calpine, Bloomberg points out, making it more difficult to cope with declining margins for its fossil and nuclear plants. The company has tried to diversify in recent months, buying natural gas generation in the Northeast and Arizona.
Under the proposed deal, Talen has the right to solicit better offers over the next 40 days, the company said in a statement. Talen will face a $50 million termination fee if it ends the deal with Riverstone, which would drop to $25 million if another offer is accepted during the "go-shop" period.
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