Calpine executives have said the company’s management would stay in place after a takeover by a New Jersey private equity firm.
“It’s business as usual,” said Brett Kerr, a Calpine spokesman.
The Houston power company Calpine said Friday morning that it has agreed to a sale to the New Jersey private equity firm Energy Capital Partners in a deal with an enterprise value of $17 billion.
“It is important to remember that this transaction is about the value of Calpine as it is run today — the people, assets and customers of Calpine, and operational savings is not the focus,” Kerr said.
Energy Capital and a group of investors will pay $15.25 a share in cash, or $5.6 billion, about a 50 percent premium to Calpine’s share price before reports surfaced in May that the power company, one of the nation’s largest, was considering putting itself up for sale. Calpine has more than $11 billion in debt.
Energy Capital’s group of investors includes Access Industries, a New York-based holding company, and the Canada Pension Plan Investment Board, which invests in pension plans on behalf of the Canadian government.
Energy Capital did not immediately respond to a request for comment.
Calpine’s stock climbed sharply in after-hours trading, and by mid-morning had risen more than 10 percent to $14.87, up from $13.50 at market close.
Calpine and Energy Capital must get shareholder as well as regulatory approval from the Public Utility Commission of Texas, among other agencies, Kerr said. On Friday, two law firms, New York-based Levi & Korsinsky and San Diego-based Johnson & Weaver, notified shareholders that they are investigating the terms of the deal.
If the deal goes through, it will result in a more than $9.1 million payoff for Calpine CEO Thad Hill, who owns nearly 600,000 shares of the company’s stock, according to filings with the U.S. Securities and Exchange Commission.
Late last month, Hill confirmed that the company was negotiating a sale with a potential buyer, which he declined to name. Media reports, however, identified the suitor as Energy Capital Partners.
Calpine, which employs about 800 in Houston, has struggled in recent years in the face of persistently low electricity prices, a surge of renewable energy and the high costs of operating fossil fuel power plants. The company reported a second-quarter loss of $219 million, significantly larger than its $29 million loss in the second quarter of 2016.
The deal can’t change the market, but nor would it change Calpine’s long-term plan of becoming replacing coal-fired and nuclear power plants and sharing power demand with renewable sources, analysts say.
“I think ultimately it’s a good near-term option for shareholders, as there is continual uncertainty in the power market,” said Andy Bischof, a senior equity analyst at the Chicago-based research firm Morningstar.
Calpine is not alone in its struggles with the market. NRG, which recently reported a second-quarter loss of $642 million, said in July that it will sell up to $4 billion of its assets. Last month, the Houston company launched a round of layoffs across the country but would not disclose the number of job cuts.
Dynegy, another Houston company, is said to be in talks with Dallas-based Vistra Energy about a possible merger. Dynegy earlier this month reported a second-quarter loss of nearly $300 million.
Calpine, founded in California, moved its headquarters to Houston from San Jose, Calif., in 2009, after emerging from bankruptcy in 2008. Calpine also owns the retail electricity provider Champion Energy Services, which it bought for $240 million in 2015.
Energy Capital Partners, which has offices on Louisiana in Houston, is a private equity firm that invests in power plants, pipelines, transmission and other energy assets. The firm helped Dynegy finance its $3.3 billion acquisition of 17 U.S. power plants, including six in Texas, from French energy company Engie. Dynegy last year bought out Energy Capital’s stake in plants for $750 million.
This first appeared on the Houston Chronicle – an Energy Voice content partner. For more click here.
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