Blackstone pays $543M for Dynegy

Private equity firm Blackstone Group struck a deal yesterday to buy power producer Dynegy Inc. for $543 million in cash and sell some of the company’s best assets to NRG Energy in the latest shake-up in the electric industry.

The deal values Dynegy at $4.7 billion including debt, which would make it one of the biggest buyouts of a power company since Kohlberg Kravis Roberts, TPG Capital and Goldman Sachs bought power company TXU for $32 billion in 2007.

Dynegy, like other power producers, has been hurt by slack power sales as the weak US economy sapped consumption and pressured prices. The company’s shares have lost more than 90 percent of their value since 2001.

“Fleets of older, coal-fired power plants were a license to print money when gas was at $8 (per MMBTU),” said Sanford Bernstein analyst Hugh Wynne. “At much lower gas prices prevailing today… these units are facing very challenging economics.”

Blackstone has made other bets on power. It made about six times its money when it, along with other private equity firms, bought and then quickly sold Texas Genco to NRG in 2005. Blackstone was also part of a team that mulled counterbidding for TXU in 2007, a source told Reuters at the time.