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Vistra Energy, Dynegy to Combine Generation Fleets

Vistra Energy and Dynegy Inc. said Monday they plan to merge, a deal that would create a leading integrated power company with an enterprise value greater than $20 billion and market capitalization in excess of $10 billion.

The Irving, TX-based post-merger company would own about 40 GW of installed generation capacity, more than 60% of that natural gas-fired, the companies said.

The merger would create a company that would have "a diverse generation fleet” in the Electric Reliability Council of Texas (ERCOT) and and a top combined-cycle power plant fleet in PJM and ISO-New England, “creating a platform for Vistra Energy to expand its industry leading retail capabilities in the Midwest and the Northeast, starting from Dynegy's existing retail positions in Illinois, Ohio, Pennsylvania and Massachusetts," said Vistra CEO Curtis Morgan.

Vistra is the parent company of TXU Energy and Luminant. TXU sells retail electricity and value-added services to 1.7 million residential and business customers in Texas. Luminant generates and sells electricity and related products totaling 18,000 MW of generation in Texas, including 2,300 MW fueled by nuclear power, 8,000 MW fueled by coal, and 7,500 MW fueled by natural gas.

Dynegy operates 27,000 MW, including 17,000 MW fueled by natural gas and more than 9,000 MW fueled by coal, across the Northeast, Mid-Atlantic, Midwest and Texas.

"In my opinion, Dynegy's gas fleet is really second to none, and in particular in PJM and ISO-New England," Morgan said. "...Dynegy has done a great job of acquiring efficient and flexible gas field assets in the attractive competitive generation markets of ERCOT, PJM and ISO-New England. The scale and quantity of the Dynegy generation portfolio will be a great addition to Vistra Energy's ERCOT-only operation."

Under terms of a definitive merger agreement approved by both companies' boards, Dynegy would merge with and into Vistra in a tax-free, all stock transaction. Dynegy shareholders would trade one common stock for each 0.652 share of Vistra common stock, resulting in Vistra shareholders owning 79% of the combined company and Dynegy shareholders owning 21%. Based on the exchange ratio and Vistra's closing share price of $20.30 on Oct. 27, Dynegy shareholders would receive about $13.24/share.

Morgan is to remain president and CEO of the post-merger Vistra, with current Vistra CFO Bill Holden and current Vistra COO Jim Burke remaining in those positions. An 11-member board of directors would consist of eight members of the Vistra board and three from Dynegy's board.

The companies anticipate closing the transaction in 2Q2018.

Last year, Dynegy and Energy Capital Partners, through joint venture Atlas Power, bought Engie's fossil portfolio, including 8,731 MW of generation capacity in the ERCOT, PJM and ISO-New England footprints, for $3.3 billion.

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