Allentown, Pennsylvania-based Talen Energy – a major power generator and energy retailer already operating in the PJM (Mid-Atlantic), ISO-NE (New England), and ERCOT (Texas) markets – announced on July 20 an agreement to acquire the total 2,500 MW combined-cycle, natural gas (NG)-fired generating portfolio of Mach Gen, a private company with headquarters in Athens, New York.
With this deal, Talen extends its footprint in the East Copas. The acquisition, which is expected to close by year-end 2015, carries a $1.175 billion price tag, inclusive of any assumed debt, subject to customary purchase price adjustments. When the transaction is complete, Talen Energy's total generating capacity will increase to 17,600 MW, before the required sale of about 1,300 MW to meet a Federal Energy Regulatory Commission (FERC) mitigation order related to the transaction that created Talen Energy.
"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 CEO 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."
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.
