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Dynegy Sells Massachusetts Coal Facility, Merger in Progress

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Dynegy Inc. recently announced that it has agreed to sell the site of the former Brayton Point Power Station in Somerset, MA to Commercial Development Company, Inc. The company expects to conclude the deal by the end of 2017.  However, the financial terms of the agreement were kept under wraps.

The decision to retire Brayton Point station, a 1,488-megawatt (MW) coal-fueled unit, was made before Dynegy decided to purchase the same from Energy Capital Partners in April 2015. Brayton Point Power Station shut down operations in May 2017.

Dynegy’s Commitment to Community

Dynegy was committed to find a buyer for the coal plant, as it had plans to develop the land in such a manner that will benefit the community. Commercial Development Company has a track record of repurposing redundant industrial sites for several economic and social benefits of communities.

Dynegy’s Strategy

Since 2013, Dynegy has increased scale and shifted portfolio mix, from a coal-based portfolio to a gas-based one, with the support of several acquisitions. Dynegy has entered into a series of agreements in the recent past to sell off inorganic assets. The proceeds were utilized to fund growth projects and debt reduction. Additionally, these events have also aided in supporting ongoing operations and commercial activities. Toward this, the company announced the sale of its Lee Energy Facility to an affiliate of Rockland Capital, IL, for $180 million very recently. (Read more: Dynegy Divests Lee Facility for $180 Million to Lower Debts)

As such the decision to retire its Brayton Point coal facility is a testament to the company’s focus on lowering emission levels.

Dynegy’s Acquisition in Progress

Dynegy recently entered into an agreement with Vistra Energy Corp (VST - Free Report) to get acquired in an all-stock deal worth $1.74 billion, in a merger transaction. Both the companies anticipate the closing of the merger transaction in the second quarter of 2018, subject to approvals by the shareholders of both companies and other customary conditions.

Price Movement

Dynegy has outperformed the industry in last three months. The company’s shares gained 24.0% compared with the industry’s growth of 1.5%.

Zacks Rank & Stocks to Consider

Dynegy currently carries a Zacks Rank #4 (Sell).Better-ranked stocks in the same industry include UNITIL Corporation (UTL - Free Report) and Atlantic Power Corporation (AT - Free Report) . Both carry the Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

UNITIL posted third-quarter 2017 earnings from continuing operations of 16 cents per share, beating the Zacks Consensus Estimate of 11 cents per share by 45.5%. It 2017 estimates increased to $2.03 per share from $1.98 per share in the last 30 days.

Atlantic Power posted third-quarter 2017 earnings from continuing operations of 3 cents per share, beating the Zacks Consensus Estimate of 2 cents per share by 50%. It 2017 estimates have narrowed to a loss of 22 cents per share from a loss of 27 cents per share in the last 30 days.

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