Vistra Energy, Dynegy to combine in $1.7 billion stock deal

The combined company would serve 240,000 commercial customers

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The boards of Houston-based Dynegy Inc. and Dallas-based Vistra Energy (formerly Energy Future Holdings) approved an all-stock merger deal worth about $1.7 billion.

The merger of the two merchant power generation firms will create a company with a combined market capitalization of around $10 billion. The transaction is expected to close in the second quarter of 2018.

In the joint press release, the companies said the merger would combine Dynegy’s generating capacity and retail footprint with Vistra’s integrated ERCOT model.

The combined company would serve 240,000 commercial customers and 2.7 million residential customers in five states, and own 40 GW of generating capacity.

Curt Morgan will lead the combined company as president and CEO, with a board consisting of the current eight members of the Vistra Energy board and three members from Dynegy’s board. Bob Flexon will continue to serve as president and CEO of Dynegy through April 30, 2019 or the date the transaction closes, whichever comes first.

A combination of forces, including flat demand, cheap natural gas and low renewable energy prices, are putting pressure on merchant generators, making it hard for them to recoup their costs.

According to a study by the Wilkinson Barker Knauer LLP law firm and the Power Research Group, merchant generation funded by private risk capital was once thought of as the future of power generation. Instead, the industry is facing the prospects of more bankruptcies and mergers to strengthen weaker companies.

Battery systems for grid-scale energy storage is more than coming into its own as being economically viable in optimizing the performance of gas turbines.

NRG Energy unit GenOn Industry, with more than 15 GW of power across 18 states, filed for bankruptcy in June 2017. Meanwhile, Calpine’s 2016 profits nosedived by 60 percent from a year earlier.

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