Commercial, Industrial, Power Prices, Utilities - August 21, 2017
Private equity to acquire Calpine for $5.6B
Less than a year after Calpine Corp. announced its acquisition of Noble Americas Energy Solutions LLC, a large independent supplier of power to commercial and industrial retail customers, Calpine itself is being taken over amid a period of sustained challenges to the broader merchant power sector.
Pursuant to private equity firm Energy Capital Partners and a consortium of investors reached an agreement to acquire Calpine Corp. for $5.6 billion. Calpine shareholders will receive $15.25 per share, marking a 51% premium to Calpine's unaffected share price of $10.07 on May 9, the date prior to an initial report from The Wall Street Journal that the company was considering a sale. The companies expect to close the deal, subject to regulatory and shareholder approval, in the first quarter of 2018.
"With ECP, Calpine will be able to operate as it always has, executing on our strategic objectives of providing safe and reliable power and serving our retail and wholesale customers with differentiated products and services," Calpine President and CEO Thad Hill said in an Aug. 18 news release. "We will also continue to strengthen our wholesale power generation footprint, while benefiting from ECP’s support, industry expertise and long-term investment horizon. In short, Calpine will continue to be the nation’s premier competitive power company."
Calpine is one of a small number of remaining publicly traded U.S. independent power producers. The sector of businesses have struggled in recent years as low natural gas prices and increasing amounts of low-cost renewable energy are added to the grid, pressuring margins for older, traditional generation owners. The trend has ushered in an era of consolidation/restructuring for the industry, with Talen Energy being taken private late last year, Dynegy currently considering buyout offers and NRG Energy in the midst of a restructuring that includes the sale of 6 GW of generation, including its renewable energy assets.