UPDATE: Dynegy's stock soars after report of buyout approach; analyst suggests it could go a lot higher

05/19/17 09:48 AM EDT

Shares of Dynegy Inc. (DYN) shot up 24% toward a three-month high in premarket trade Friday, after The Wall Street Journal reported that the power company was approached by rival Vistra Energy Corp. (VST) regarding a potential takeover. Analyst Ali Agha at SunTrust Robinson Humphrey said his analysis derives a $14-per-share net asset value for Dynegy, which would be 93% above Thursday's closing price of $7.26, and would give the company a market capitalization of about $1.84 billion. Agha Vistra buying Dynegy "would make strategic sense" because it would allow Vistra to diversify out of the Texas power market; Dynegy has a relatively small exposure in Texas, implying market power concerns would not be an issue; and because Vistra Chief Executive Curt Morgan used to work at Energy Capital Partners, which is Dynegy's largest shareholder. Dynegy's stock traded at $8.99 about 45 minutes before open, the highest level seen during regular session hours since Feb. 24. The stock had tumbled 14% year to date through Thursday, while Vistra shares had lost 4.5% and the S&P 500 has gained 5.7%.

-Tomi Kilgore; 415-439-6400; AskNewswires@dowjones.com


(END) Dow Jones Newswires

05-19-17 0948ET

Copyright (c) 2017 Dow Jones & Company, Inc.