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Calpine agrees sale in $5.6bn private equity led deal

Baku, August 20, AZERTAC

Calpine, one of the largest electricity generation companies in the US, has agreed a $5.6bn deal to be bought by private equity firm Energy Capital Partners and a consortium of investors, in the latest sign of the trend for power producers to leave the public markets, according to Financial Times.

Frank Cassidy, chairman of Calpine, said the deal was the result of “an exhaustive review of strategic alternatives undertaken by our board, with the assistance of outside advisers, to maximise shareholder value”.

Calpine said it was talks about a potential sale last month when it reported quarterly earnings.

US electricity companies with a stock listing have in recent years been seeking to add more regulated assets, which offer the stable returns generally sought by investors.

Calpine, however, is exposed to the “spark spread” between the prices of the gas that it buys and the electricity that it sells.

The company describes itself as the largest US generator of electricity from natural gas and geothermal resources. It has about 26,000 megawatts of generation capacity, 22,000 megawatts in efficient gas-fired and combined heat and power plants.

In the second quarter it produced about half of its power in Texas, with the rest mostly in the northeastern US and California.

Since September 2014, Calpine’s shares have lost about 38 per cent of their value, in part because of competition from renewable energy depressing electricity prices.

Calpine shareholders will receive $15.25 a share in cash, representing a 51 per cent premium to the company’s closing price on May 9, the day before media speculation about a deal began.

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