Buyout firm Riverstone Holdings has emerged as the leading contender to buy Talen Energy Corp., the power generation company it helped form last year, people with knowledge of the matter said.
A deal for the Allentown, Pennsylvania-based power-plant owner could be announced shortly, said one of the people, who asked not to be identified because the information is private. No final decision has been made and Talen could select another buyer or remain independent, the people said.
New York-based Riverstone owned about 35 percent of Talen at the end of last year, regulatory filings show.
Talen shares jumped 10 percent to $12.85 as of 1:24 p.m. in New York, giving the company a market value of about $1.6 billion. Talen has about $4.8 billion in total debt, according to data compiled by Bloomberg.
Representatives for Riverstone and Talen declined to comment.
Riverstone helped form the company by merging some of its power plants with the power generation unit of PPL Corp. Talen’s shares plunged about 70 percent in the seven months following its June 2015 spinoff from PPL. Weak power prices hurt margins at the company’s fleet of coal, nuclear, and natural-gas fueled power plants, according to Bloomberg Intelligence.
Executives at Riverstone, which focuses on energy investments, believe that Talen is attractively priced and would benefit from being taken private, one of the people said.
Energy trade publication Sparkspread reported in April that Talen had drawn interest from buyout firms.