Power giant Calpine may be on verge of sale
New Jersey private equity firm reportedly buying Houston power giant for $17 billion
Houston power firm Calpine is close a sale to a New Jersey private equity firm, Energy Capital Partners, in a deal valued at $17 billion.
Houston power company Calpine is close to a sale to a New Jersey private equity firm in a deal valued at $17 billion, according to media reports.
The sale to Energy Capital Partners could be announced as soon as Friday, Bloomberg News reported, citing anonymous sources. Energy Capital would pay $15.25 a share in cash, 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’s stock climbed sharply in after-hours trading.
Late last month, Calpine CEO Thad 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.
Calpine is not alone. NRG, which recently reported a secondquarter 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 secondquarter 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.