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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.
“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.
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.
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