Billionaire investor Carl Icahn said his current $665 million bid for Dynegy Inc. will be his last, after winning federal regulatory approval to acquire the third-largest U.S. independent power producer.
No price increase or further extensions will be made, Icahn Enterprises said a statement. The bid, previously extended to today, will expire Feb. 18 at 5 p.m. New York time unless at least 35 percent of outstanding Dynegy shares are offered at Icahn’s price of $5.50 a share, bringing his stake to 50 percent, Dynegy said in a filing today.
About 1.4 percent of the shares were tendered as of Feb. 11. Icahn is the largest shareholder of Houston-based Dynegy. His offer, announced on Dec. 15, values the company at $4.73 billion including debt. Icahn bid after shareholders rejected a $5-a-share offer by Blackstone Group LP in November. Hedge fund Seneca Capital, the second-largest Dynegy shareholder, opposes the offer.
“It looks like the Icahn deal won’t happen based on the vote total as of Friday,” Charles Fishman, a Falls Church, Virginia-based analyst for Pritchard Capital Partners, said today in an interview. “It’s Seneca’s effort to gain board seats you have to watch at this point.”
Dynegy will pay $5 million to Icahn should the offer fail and may owe him up to $16.3 million, according to the amended filing.
Dynegy rose 14 cents, or 2.5 percent, to $4.81 in New York Stock Exchange composite trading at 4:01 p.m. The shares have one buy rating, 11 holds, and one sell from analysts.
Dynegy and Icahn amended the December merger agreement advancing the final deadline for the offer to Feb. 18, eliminating previous terms allowing for an extension into September, according to today’s filing. Final regulatory approval for the transaction was issued Feb. 10 by the Federal Energy Regulatory Commission.
Seneca, based in New York, has said Dynegy may be worth $8 a share should it refinance debt, sell some assets, and wait for economic recovery to revive demand and prices for its power. Dynegy’s cash flow could be improved by new power market rules in New York recently approved by the Federal Energy Regulatory Commission and under consideration by the state’s electric-grid operator, Seneca said today in a statement.
Seneca said it will solicit shareholder approval to elect E. Hunter Harrison, former chief executive officer of Canadian National Railway Co., and Jeff Hunter, chief financial officer of closely held US Power Generating Co., to replace Chief Executive Officer Bruce Williamson and David W. Biegler on Dynegy’s board.
NRG Energy Inc. is largest U.S. independent power producer by revenue and Calpine Corp. is the second-largest. Independent power producers generate electricity without a utility unit that draws revenue at regulated rates.