Seneca Urges Dynegy's Shareholders to Reject Icahn's $665 Million Bid

Seneca Capital, the second-largest shareholder in Dynegy Inc., opposes billionaire investor Carl Icahn’s $665 million bid to buy the U.S. power producer, saying the company may be worth more than three times that amount.

Shareholders should reject Icahn Enterprise LP’s $5.50-a- share bid, announced on Dec. 15, the hedge fund said in a statement today. Dynegy, the third-largest independent power producer, is worth as much as $7 a share today and may rise to $18 a share once economic recovery revives demand for power from its plants, New York-based Seneca said.

Seneca, which has tried to secure two seats on Dynegy’s board for its own candidates, said the current board’s approval of the sale shows a “reckless disregard” for its duties.

“Dynegy’s continued mission to impose a transaction upon shareholders at any price -- and at any cost -- is a brazen attempt to disenfranchise shareholders and seize management’s $38 million change-of-control severance,” Seneca said.

Seneca joined with Icahn in opposing a $5-a-share bid for Dynegy by Blackstone Group LP in November. That deal was abandoned because it lacked the support of a majority of shareholders. Seneca says Icahn’s bid is insufficient and indicates the board hasn’t carefully reviewed its options to run Dynegy as a standalone company.

Dynegy will continue looking for better offers until Jan. 24 and Icahn has agreed to support a better all-cash bid if he can’t top it, David Byford, a spokesman for the power producer, said in an e-mailed statement.

‘Very Positive’

“The Icahn offer, coupled with the company’s ability to continue soliciting superior offers, is a very positive outcome for all Dynegy shareholders,” Byford said.

Independent power producers sell power into wholesale markets, subjecting the companies to price fluctuations. NRG Energy Inc. and Calpine Corp. are the two largest U.S. independent power producers.

Dynegy rose 4 cents to $5.67 at 4:05 p.m. in New York Stock Exchange composite trading. The shares have fallen 38 percent this year.

To contact the reporter on this story: Jessica Resnick-Ault in New York at jresnickault@bloomberg.net

To contact the editor responsible for this story: Tina Davis at tinadavis@bloomberg.net.

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