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Riverstone affiliates seek FERC approval of $5.2B deal to acquire Talen Energy

and threeaffiliates of Riverstone HoldingsLLC have asked FERC to sign off on a deal under which thoseaffiliates would acquire the 65% of Talen common stock currently owned bypublic shareholders.

In amerger applicationfiled with FERC July 15, Talen and Riverstone said the transaction raises nocompetitive concerns in any relevant market because the companies already areaffiliated by virtue of Riverstone's existing 35% ownership interest in Talen.The transaction will create no new affiliates beyond those already approved byFERC and will not involve any change in the facilities owned and operated byTalen, according to the filing.

Talen,an independent power producer that owns or controls 16,000 MW of capacity ineight states, was formedin June 2015 after Riverstone combined its competitive generation assets withthose owned by affiliates of PPLCorp.

Currently,Riverstone affiliates Raven Power Holdings LLC, C/R Energy Jade LLC andSapphire Power Holdings LLC own 19.8%, 12.7% and 2.5%, respectively, of Talen'scommon stock, while the remaining 65% is widely held by public shareholders.But once the transaction is complete, Talen will be 100% privately held bythose three entities, with Raven Power owning 56.6%, C/R Energy Jade owning36.3% and Sapphire Power owning 7.1% of the company, the FERC filing explained.

Underthe deal, the Riverstone affiliates would acquire all the Talen Energy commonstock they do not currently own for $14.00/share in cash. The companies saidthe transaction has an enterprise value of $5.2 billion.

Talenand Riverstone asserted that the transaction would easily pass a horizontalmarket power screen, were one necessary, because it will not result in anychange in business activities, market share or market concentration in any ofthe balancing authority areas — including the , , , , and BAAs — inwhich Talen's assets are located.

Moreover,the deal does not involve the acquisition of any transmission, coaltransportation facilities, natural gas pipeline or natural gas distributionassets, and FERC determined that the existing affiliations do not raise anyvertical market power concerns when it conditionally on the creation of Talen inDecember 2014, the companies noted.

Asfor any potential negative impact on rates, Talen and Riverstone said thetransaction will have none, since applicants and their affiliates do notprovide third-party jurisdictional transmission service and have no captivewholesale requirements customers.

"Allwholesale sales of electric energy, capacity and certain ancillary services byapplicants are and will continue to be sold at market-based rates or atcost-based rates approved by the commission," Talen and Riverstone said.

Talenand Riverstone asked FERC to sign off on the deal by Sept. 13 without holdingan evidentiary hearing so it can close "as soon as practicable given otherregulatory approvals." The transactionwas announced inearly June and receivedclearance from the U.S. Federal Trade Commission soon thereafter. (EC16-151)