Blackstone loses Dynegy after investor opposition

NEW YORK, Nov. 23, 2010 (Reuters) — Private equity firm Blackstone Group lost its $602 million bid to buy power producer Dynegy Inc after failing to win shareholder support in the face of opposition from the two largest shareholders.

Dynegy said it planned to end the deal later on Tuesday and would look for other buyers, including the two shareholders -- billionaire Carl Icahn and hedge fund Seneca Capital. Icahn has said he may bid for Dynegy if the Blackstone bid failed.

"Because we believe stockholders will not approve the transaction with Blackstone, the board will initiate an open strategic alternatives process to maximize stockholder value," Dynegy Chief Executive Officer Bruce Williamson said in a statement.Blackstone reiterated in a statement on Tuesday that its $5 a share bid was its best and final offer, and wished Dynegy the best as it looks for a new buyer.
Dynegy shares fell 4.1 percent to $4.93 in morning trading, dipping below the Blackstone bid after the announcement. Blackstone was down 2.1 percent at $12.97.
Seneca and Icahn had fiercely opposed the Blackstone proposal because they thought it was too low, even after the private equity firm raised its bid by 11 percent a week ago to try to muster support for the deal.
Blackstone's bid had hung in the balance since Wednesday, when Dynegy delayed counting the shareholder vote on the deal.The shareholder meeting is still due to restart on Tuesday afternoon, Dynegy said.
Dynegy, which once sought to challenge Enron Corp in the power trading business and even sought to buy the disgraced energy company shortly before its demise, has focused in the last several years on operating its power plants in the Midwest, Northeast and West.Dynegy sells power to the wholesale markets and operates more than 12,000 megawatts of gas- and coal-fired power plants.The company is very sensitive to natural gas prices and has suffered as oversupply has driven down the value of the fuel. It has argued that "the risks of continuing to operate as a stand-alone public company significantly outweigh the potential upside of doing so," forecasting $1.6 billion of negative cash flow between 2011 and 2015.But Seneca has put forward a much rosier view of Dynegy's prospects, saying that power prices are improving and that the company is worth more than $6 a share.
Dynegy said a special committee of its independent board members, chaired by lead independent director Patricia Hammick, will oversee what it calls its strategic alternatives process.
The company has said it had put itself up for sale two years before reaching the Blackstone deal and had run a "go-shop" process where competing bids could be entered afterward. No bidder emerged during those processes.Dynegy said it would engage with Seneca Capital about appointing an independent candidate to its board, which currently has six members, five of whom are independent.Seneca has already nominated two candidates to Dynegy's board and proposed the removal of two current directors, including CEO Williamson.Separately, Dynegy also adopted a shareholders rights plan.
Blackstone's bid was structured in an unusual way. It included a $1.36 billion deal by Blackstone to sell four of Dynegy's natural gas-fired power plants to NRG Energy Inc .NRG will look to lower the price of its bid for the plants before agreeing to any new deal for those assets, CEO David Crane has said.Goldman, Sachs & Co and Greenhill & Co LLC will be financial advisers for the open strategic alternatives process. Sullivan & Cromwell LLP is legal counsel

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The Xbox 360 turns 5

Over the course of 30 hours from November 20 to November 21, 2005, Microsoft allowed more than 2,000 Xbox fans to be the very first people to get their hands on the brand-new Xbox 360. On the second day, those fans became the first people to be able to buy the all-new console. The event, which was held in Palmdale, Calif., was called "Zero Hour." It heralded the beginning of the "next-gen" video game console generation.
The Xbox turned 5 years old on Sunday..

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New Technologies That Will Change Enterprise Computing

This fall will see the adoption and increased widespread use of new technologies that will alter the way enterprise computing is accomplished. Some of these technologies come from the consumer technology side of the business, some are grown from labs, and some are the result of integrating existing technologies. Check out our top five picks for technologies that will change the game in enterprise computing.
1. Search, the next generation.
Google grew into a huge company by capitalizing on melding search with context-specific advertising. The next generation of search will take the contextual idea about 10 steps forward. By combining search, social networking and location awareness, users will be able to add emotional context to search, and advertisers will be able to derive revenues from customer presence rather than customer awareness. The next generation of search is a huge opportunity in which neither Google nor Microsoft nor Yahoo is now in a position of dominance.
2. A virtual company means more than a garbled conference call.
The mobile enterprise? Maybe, but right now the software to build virtual companies is sorely lacking in capabilities and integration. Replicating meetings both formal and informal, real-time sales results, and all of the myriad elements that go into running a real, face-to-face company should be the outcome of the business services available. Right now you can assemble disparate pieces of a business, but the virtualized, mobile enterprise is not yet there. But don't think that lots of entrepreneurs and venture capitalists aren't interested and investing in this area.
3. Virtualizing all the other stuff.
Virtualization has a lot more legs than just cutting down the number of servers in the data center. Servers, storage, networking and client computing from desktops through notebooks and smartphones are all in line for the virtualization makeover. Virtualization management is catching up, but the big management console that lets you know the availability, security and capacity of an entire company full of virtualized devices is still under development. This fall will see those management consoles being introduced by a range of vendors.

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