Filed under: Deals, Private equity, Market matters
Calpine (NYSE: CPN), which is a major power company, has experienced lots of drama over the years. However, the company has been able to stabilize things - and has recently come out of bankruptcy.
But suddenly the drama has returned: NRG Energy (NYSE: NRG), a rival, has made a $11 billion hostile bid for Calpine (it’s a stock-for-stock transaction).
And there’s lots of momentum for the deal. Keep in mind that Harbinger Capital Partners, which is a major hedge fund, owns 24% of Calpine’s shares and is pushing for a combination.
No doubt, NRG-Calpine would be a powerhouse, amounting to roughly 45,000 megawatts. It will also expand NRG’s presence in the valuable California market.
True, the valuation for the transactions looks meager. But, I suspect we’ll ultimately see a higher bid. According to Harbinger’s letter to Calpine:
“We believe this offer represents a good starting point and that the Board should immediately engage with NRG concerning the terms.”
Tom Taulli is the author of various books, including The Complete M&A Handbook
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