Talen Energy Corporation (NYSE: TLN) announced an agreement today (7/20) to acquire MACH Gen, LLC, which owns more than 2,500 megawatts of combined-cycle, natural gas-fired generating capacity, for $1.175 billion inclusive of any assumed debt, subject to customary purchase price adjustments.
"This negotiated deal represents a significant step in the execution of our growth strategy, and provides meaningful improvement in our cash flow profile," said Talen Energy President and Chief Executive Officer Paul Farr. "The transaction adds highly competitive combined cycle gas assets in NYISO and ISO-NE, two mature and liquid wholesale power markets, with the opportunity to create significant value by optimizing a very efficient gas-fired plant in Arizona."
Pending required regulatory approvals, the transaction is expected to close by the end of 2015.
When the transaction closes, Talen Energy's total generating capacity will increase to 17,600 megawatts, before the required sale of about 1,300 megawatts to meet a Federal Energy Regulatory Commission mitigation order related to the transaction that created Talen Energy.
Talen Energy expects to finance the transaction with a combination of debt and cash. The final financing plan will take into consideration market conditions and the amount of existing MACH Gen debt to be assumed, as well as expected proceeds from FERC mitigation sales and other pending divestitures.
Citi served as financial advisor to Talen Energy. Talen Energy has obtained committed debt financing from Citi in an amount sufficient to fund the purchase price. Bracewell & Giuliani LLP was transaction counsel for Talen Energy. Simpson Thacher & Bartlett LLP was finance counsel for Talen Energy.