A year after Talen Energy, a power generation company in Allentown, Pennsylvania, started trading on the New York Stock Exchange, Riverstone Holdings is looking to take it private by acquiring the 65 percent of Talen it does not already own.
In a statement on Friday, Talen said Riverstone affiliates were offering $14 per share in cash or a total of $1.2 billion based on the 129 million of shares outstanding as at 31 March 2016.
The offer price represents a 56 percent premium to the closing price of $9.00 per share on 31 March, the last trading day before reports of a potential sale of Talen became public.
The agreement between the two parties also includes a ‘go-shop’ clause, allowing Talen to actively solicit other offers. If the company is successful in securing a superior proposal from a third party, it will pay Riverstone a termination fee of $50 million. However, that fee is reduced to $25 million should termination occur within 40 days – the go-shop period.
Riverstone helped launch the company in June 2014, agreeing to combine segments of PPL Corporation’s business, a US utility, with its own generation business.
Last June, Talen Energy began trading on the New York Stock Exchange debuting with a share price of $18.74 which in the next nine months, however, went into a steady decline falling below $6.00 per share as recently as this past February.
Asked why Riverstone, Talen Energy's largest single shareholder, is interested in taking the independent power producer private just one year after the company went public, the firm declined to comment.
It also declined to comment on the 56 percent premium it is offering for the IPP on its 31 March 2016 closing price.
Since April, Talen’s stock price has been gaining steadily, reaching the proposed $14 per share price during Friday trading when news of a possible acquisition was reported.
According to Talen Energy’s statement, the company owns or controls 16GW of capacity in eight states, primarily in the northeast, mid-Atlantic and southwest regions of the US. Of its 24 power-generating assets, seven are coal plants – one of which is being upgraded to co-fire with natural gas.