UPDATE 3-Icahn offers to buy Dynegy for $665 mln

* Icahn offers $5.50 a share, 10 pct over Blackstone bid

* Dynegy to solicit superior proposals through Jan. 24

* Dynegy shares up 4.2 pct in premarket, above Icahn offer
(Changes 1st paragraph; updates shares)

NEW YORK, Dec 15 (BestGrowthStock) – Billionaire investor Carl
Icahn said he has offered to buy power producer Dynegy Inc
(DYN.N: ) for $665 million cash, just three weeks after he helped
block a bid by private equity firm Blackstone Group (BX.N: ) to
buy the company.

In premarket trading, Dynegy shares were up 4.2 percent to
$5.68, above Icahn’s $5.50-a-share offer, a sign that investors
expect a higher bid for the Houston-based energy company.

The Icahn Enterprises LP (IEP.N: ) offer is 10 percent higher
than Blackstone’s bid and calls for Dynegy to continue
soliciting other buyers until Jan. 24, the companies said in a
press release.

Dynegy sought other buyers earlier this year but failed to
attract a price higher than the Blackstone bid.

Dynegy said its board had unanimously approved a definitive
agreement to be acquired by Icahn at $5.50 a share.

Icahn Enterprises, which owns about 9.9 percent of Dynegy’s
outstanding shares and holds options to buy another 5 percent,
said it might support a superior all-cash offer for Dynegy if
one emerged.

Dynegy has struggled in recent years amid soft power prices
and high debt, which stands at about $3.95 billion, and has
long been considered a merger candidate.

The company owns about 12,100 megawatts of power production
capacity on the East Coast, Illinois and the West Coast. It was
once a rival to Enron Corp and was forced to undergo
significant restructuring after Enron’s demise decimated the
power and gas trading businesses.

The company is very sensitive to natural gas prices and has
suffered as oversupply has driven down the value of the fuel.
It has forecast negative cash flow of $1.6 billion between 2011
and 2015.

Icahn and hedge fund Seneca Capital opposed the failed
Blackstone bid for Dynegy, calling it too low.

Icahn will start a tender offer for Dynegy shares by Dec.
22.

Goldman Sachs (GS.N: ) and Greenhill & Co LLC are the
financial advisers to Dynegy in the deal.
(Reporting by Matt Daily and Ernest Scheyder, additional
reporting by Arup Roychoudhury in Bangalore; Editing by S. John
Tilak and John Wallace)

UPDATE 3-Icahn offers to buy Dynegy for $665 mln