The Work

December 15, 2010 12:38 PM

S&C Advises Dynegy on Acquisition by Icahn

Posted by Brian Baxter

UPDATE: 2/22/11, 9:45 a.m. Bloomberg reports that Dynegy shareholders have rejected Carl Ichan's bid for the company, resulting in the resignation of CEO Bruce Williamson.

After losing in his bid for film studio Lions Gate Entertainment this week, activist investor Carl Icahn has turned it around and bought Dynegy, the third-largest independent power producer in the U.S., for $665 million in cash.

Joseph Frumkin, the managing partner of Sullivan & Cromwell's M&A group, is advising Dynegy on the deal along with corporate partner Krishna Veeraraghavan. (Veeraraghavan was one of eight S&C attorneys promoted to partner at the firm last month.)

Dynegy's independent directors first hired S&C last year for a $1 billion sale of nine power plants to LS Power Associates. The firm then advised Dynegy again in August when the Houston-based company received a lower acquisition bid by The Blackstone Group, which offered to take Dynegy private in a $4.7 billion deal, including $3.95 billion in debt, in what would have been one of the largest leveraged buyouts of 2010. (Simpson Thacher & Bartlett advised longtime private equity client Blackstone on its bid for the energy company.)

But Blackstone's $604.5 million takeover offer for Dynegy collapsed in late November when the bid failed to receive majority approval during a shareholder vote, Bloomberg reports. One of those shareholders opposing the Blackstone bid was Icahn, who joined hedge fund Seneca Capital in nixing the deal as the company's largest shareholders. That put Dynegy back on the market.

It didn't take long for Icahn to swoop in. General counsel Marc Weitzen, associate general counsel Keith Schaitkin, and assistant general counsel Andrew Langham handled the Dynegy deal in-house for Icahn Enterprises, the holding company for the activist investor. As previously noted by The Am Law Daily, the president of Icahn Enterprises, Daniel Ninivaggi, is a former Winston & Strawn partner.

Bloomberg reports that Dynegy's board has unanimously approved the offer by Ichan, which will trigger a $16.3 million payment to Blackstone. The private equity giant stood to receive the breakup fee if Dynegy accepted a higher bid within a certain time period.

Fried, Frank, Harris, Shriver & Jacobson corporate partner Philip Richter advised Greenhill & Company, financial adviser to Dynegy on both the Icahn and Blackstone bids. Dynegy's deal with Icahn is expected to close in the first quarter of 2011.

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