M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

Wednesday, January 26, 2011

Dynegy gets no takers on its 'go-shop'

According to Reuters Dynegy was not able to coax anyone to make an offer to top Carl Icahn's $665 million offer for the company.  The company updated its 14d-9 to include the following disclosure regarding the go-shop process:

 Of the 54 parties contacted, 48 parties declined to participate in the “go-shop process” or did not respond to repeated contacts from representatives from Greenhill and Goldman Sachs, four parties were given access to confidential information regarding the Company and offered the opportunity to receive a presentation from Company management and two parties indicated that they would perform due diligence on the Company using publicly available information.  ...  Of the four parties given access to confidential information, one party participated in meetings with Company management (another of these parties had previously participated in meetings with Company management under the “go-shop” process conducted in the fall of 2010).   After completing their due diligence, representatives of each of the two large private equity firms that separately devoted substantial efforts to due diligence separately informed representatives from Greenhill and Goldman Sachs that they did not believe they would be able to offer to acquire the Company at a price above the Offer Price and that they would not submit an acquisition proposal. Of the two other parties given access to the data room, one party ...[was] only interested in acquiring certain assets of the Company and needed to partner with another party interested in acquiring the Company as an entirety, and the other party informed representatives [...] that they would not submit an acquisition proposal and subsequently ceased communications [...] regarding their interest in a transaction with the Company [...] .

It sounds like Dynegy's bankers were really burning the mid-night oil trying to come up with alternatives but were unsuccessful.  For those of you out there who have done this -- my sense is that 50+ contacts, yielding 4 or so potential bidders is not unusual in a go-shop process -- but I'm likely wrong.  Feel free to let me know in the comments how many contacts is typical for an i-banker to make as part of a go-shop process. 



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