I am suprised there has not been any comments about the Ichan offer of 5.50/share.
How is this different from the Blackstone offer? Wasn't it Ichan who stated the company was worth $6-7 a share?
I noticed, there are no lawsuits on this current offer vs multiple filings against the Blackstone deal. Friends in high places?????????
Following are some merger comments: For the past 8 years or so I bought 4,500 shares of DYN @ an average cost of $ 2.66 per share. In May, 2010, the company declared a 1:5 reverse split. Was this split to benefit an entity who was already troubling the sell out waters?
My shares became 500 @ $ 13.30 per share. The Offer to Purchase, much to my surprise, showed that DYN, in the 2nd quarter 2008,sold for a high of $ 48.20. That translates to $ 241.00 into todays' shares. I wouldn't be a bit surprised if DYN doesn't return to that 2008 price if the new owners don't shift income. The offer conveniently omits a schedule of golden parachutes involved in the sale. While I'm in this mood: corporate officers should not be allowed to have anything to do with directors' compensation, and conversely, directors should not have anything to do with setting officers' compensation. When shareholders vote for directors, the directors' total compensation package should accompany that election; that removes a lot of back-scratching. Stockholders have been fiscally raped for too long.
>>>I am suprised there has not been any comments about the Ichan offer of 5.50/share.
How is this different from the Blackstone offer? Wasn't it Ichan who stated the company was worth $6-7 a share?<<<
Its raining here today and I have a little free time, so I'll make a few comments just to perhaps get a discussion going.
First, I don't really see any difference between the Blackstone offer and the Icahn offer, other than the fact that the Icahn offer is higher. Plus, Dynegy opened its books for Blackstone, whereas Icahn apparently just made his bid based on currently public information.
You could probably almost call it an off-the-cuff bid, probably based on his feel for Dynegy's current condition and its future potential, combined, of course, with what he plans to do with it.
Second, as someone mentioned, he has a free option out of his bid. All he has to do is vote his shares against his own offer. Pretty interesting.
My guess is that he is just trying to bid up the price of Dynegy in hopes that another bidder materializes. However, he could really want to buy the company. We just don't know for sure what his motivation is.
Consider this out of the article at the link you posted:
>>>Seneca Capital, which 9.3 percent of Dynegy's shares, last week encouraged other shareholders to reject Icahn's offer, arguing the company is now worth $6 to $7 per share and its value could rise to $16 to $18 per share as the economy recovers.<<<
Apparently Icahn and Seneca both want everyone to think Dynegy is worth $6 to $7 a share. OK, fine. What I would like to know is exactly how they come up with that number. What is the $6 to $7 based on?
We know it couldn't possibly be based on earnings. Dynegy has no earnings for 2010, probably won't have any next year, and is experiencing severe cash burn. So the $6 to $7 must be based on future potential of some sort. Maybe they are looking at earnings 3 to 5 years down the road or maybe they are looking at asset/liquidation/breakup value.
Whatever it is, it is fairly meaningless until they can show the numbers and computations they used to arrive at such an estimate. I haven't seen any of that, so my take is that what we have is a bidding war that will make someone a lot of money in the short run. But Dynegy's shareprice will eventually go to a level that reflects current and future earnings.
For example, $6.50 today would require using a PE of 25, based on earnings of 26 cents three years from now. Maybe that is what they are doing.
And $17 after the recovery takes hold, for example, would require a PE of 12 and earnings of $1.16 per share.
Do you think Dynegy can get out of its mess and eventually earn that kind of money? Maybe. But you won't be here to get the benefit of a higher shareprice, based on the coming economic and power market recovery, if you sell your share to Icahn or anyone else.
The only good idea I have seen lately is for GenOn (RRI/MIR) to buy Dynegy for greater than the Icahn offer, maybe $6 per share, for example. Shareholders could then put that money to work in GenCo if they wanted to, knowing that Dynegy was a part of the new, larger GenOn.
Crop with all due respect I don't expect GEN to merge with DYN.
GEN has to get off to a good start and the last thing they need is to buy a dying company. For the share holders of DYN I would sell out at the price of the Icahn offer and invest that money in GEN.
If Icahn buys DYN and sells / splits up the assets they would come at a cheaper price to GEN.
I am long 10K shares of GEN and like other analysts expect this to double in a year or so. Just look at the income statement they posted last week.
Hope to see you on the GEN board when it gets up and running!
>>>The only good idea I have seen lately is for GenOn (RRI/MIR) to buy Dynegy for greater than the Icahn offer, maybe $6 per share, for example. Shareholders could then put that money to work in GenOn if they wanted to, knowing that Dynegy was a part of the new, larger GenOn.<<<
The linked article, even though a little bit dated, mentions GenOn possibly buying Dynegy for $6 a share. I actually didn't see this until this morning and then I thought "bingo!"
Anyway, I think this article is a good review of what is going on, plus it mentions the great, influential, powerful, and wise Mr. Miller. Just kidding a little.
I think GenOn buying Dynegy would be the ideal solution. It allows Dynegy investors to get back a few of their invested pennies and then they can immediately turn around and buy GenOn shares. This would allow Dynegy shareholders to take a chance, if they so desire, on eventually recovering their lost investment dollars, once the elusive economic and power market recovery finally materializes.
As I mentioned, I no longer have any Dynegy shares. After purchasing a core position in Citigroup some days ago, a few minutes ago I took some of the Citigroup money and established a core position in GenOn.
Here is an excerpt:
"A report surfaced last month that Seneca Capital was in talks with GenOn Energy Inc. about an offer of $6 a share or more for Dynegy. GenOn shares began trading on Dec. 6 after the closing of the merger between RRI Energy and Mirant. A woman who answered the phone at Seneca Capital’s New York office declined to comment."
Good luck Dyners. I think Citigroup and GenOn will be a combination that has the potential to help us recover all the investment dollars we lost on Dynegy if we are patient enough to hold out for another 7 to 10 years. I know thats a long time for you younger folks, but believe me it will go by and we should have something by then with Citigroup and GenOn.
Going to Ontario and Quebec tomorrow. See ya'll next week.