Dynegy Announces Deal to Buy Enron
{{#rendered}} {{/rendered}}Energy marketer Dynegy Inc. announced Friday that it will buy its much larger rival Enron Corp. for $7.8 billion in stock.
The announcement came after Enron's stock plummeted about 80 percent in the past three weeks over concerns the company wasn't revealing serious financial problems to shareholders.
Under the deal ChevronTexaco Corp., which owns more than a quarter of Dynegy, would infuse about $1.5 billion. ChevronTexaco also would contribute an additional $1 billion upon completion of the deal, the companies said.
{{#rendered}} {{/rendered}}"With its market-making capabilities, earnings power and proven strategic approach to wholesale markets, Enron is the ideal strategic partner for Dynegy," Chuck Watson, Dynegy chairman and chief executive officer, said in announcing the merger.
Under terms of the deal, Enron shareholders will get .2685 Dynegy shares per share of Enron common stock, valuing each Enron share at $10.41, based on Friday's closing stock prices. That represents a 21 percent premium above Enron's closing price of $8.63, up 22 cents on the New York Stock Exchange. Dynegy's shares climbed $2.26, or 6 percent, to close at $38.76 on the NYSE.
Dynegy's current stockholders will own approximately 64 percent of the new company, with Enron's stockholders holding the remaining shares at closing. The boards of both companies have unanimously approved the transaction.