Dynegy and Enron Announce Merger Agreement

November 12, 2001 by Jeff Shepard

Dynegy Inc. (Houston, TX) and Enron Corp. (Houston, TX) announced the execution of a definitive agreement for a merger of the two companies. The combined company will be called Dynegy Inc. (Houston, TX) and will focus on the core businesses of North American and European wholesale energy markets and commercial and industrial energy users.

Under the terms of the merger agreement, Enron shareholders will receive 0.2685 Dynegy shares per share of Enron common stock. Dynegy's current stockholders, including ChevronTexaco Corp., (San Francisco, CA) will own approximately 64 percent and Enron's stockholders will own approximately 36 percent of the combined company's stock at closing. The combination is expected to be strongly accretive to Dynegy's earnings in the first year and thereafter. The boards of both companies have unanimously approved the transaction, and ChevronTexaco, which owns approximately 26 percent of Dynegy's outstanding common stock, has agreed to invest a total of $2.5 billion into Dynegy.

Chuck Watson, chairman and CEO of Dynegy; Steve Bergstrom, president of Dynegy; and Rob Doty, CFO of Dynegy will retain their current positions in the combined company. Greg Whalley, the current president and COO of Enron, will become an executive vice president of the new Dynegy. The executives will comprise the Office of the Chairman upon merger completion.

Watson stated, "This strategic combination strengthens the value of our existing core business franchises by uniting the two companies' diversified global energy-delivery networks; complementary wholesale strategies; and strong marketing, trading and risk-management capabilities. In addition, the combination fuses our intellectual capital and technology infrastructure, advancing the new Dynegy's status as a global energy merchant, with superior physical delivery capabilities and unparalleled experience navigating competitive markets for customers."

Kenneth Lay, chairman and CEO of Enron, said, "The merger protects Enron's core franchise and enables the stockholders of both companies to participate in the tremendous upside of the combined enterprise. The company we are creating will have a strong balance sheet, a world-class merchant energy operation and ample liquidity. It will build upon the strength of our core wholesale gas and power franchise, and commercial and industrial energy business. I am personally committed to working with Chuck Watson, Steve Bergstrom and their colleagues in the months ahead to accomplish the merger and to build a solid foundation for future value creation."