Vistra CEO Open to Taking $10 Billion Power Company Private

(Bloomberg) -- Vistra Energy Corp. Chief Executive Officer Curt Morgan said the market is undervaluing the company and he may explore taking it private if things don't change. The shares rose the most since January.

The Texas power generator would look at any available means to “unlock value,” Morgan said during an earnings call Friday in response to an analyst's question. “I don't know if it's taking it private or not, but that certainly would be on the list,” he said. “I think it has to be. That's not rocket science.”

Vistra rose 3.4% at 2:10 p.m. to $22.29 after earlier surging as much as 3.8%, the most in intraday trading since Jan. 4. The company has a market value of more than $10 billion.

It's not easy for independent power producers like Vistra to thrive in public markets. Cheap natural gas and, to a lesser extent, wind and solar have kept wholesale power prices low. Another merchant generator, Calpine Corp., went private after executives felt its shares were undervalued. Several utility owners including FirstEnergy Corp. have been unwinding their merchant businesses to reduce exposure to volatile power markets. Vistra has bucked that trend.

Analysts said any such deal would be difficult to finance, although it could be possible with a consortium of buyers.

“As management continues to execute, increases dividend and power volatility provides upside, we think the public market may come around to fair valuation,” utility analyst Praful Mehta, with Citigroup Inc., wrote in a research note. “Either way, we believe the fundamentals are very strong and at some point, a take-out price provides a valuation floor.”

Vistra, which operates power plants in Texas, the Northeast and Midwest, emerged from the bankruptcy of Energy Future Holdings Corp. in 2016. Its shares have slipped about 18% in the past three months. Morgan opened the company's second-quarter call Friday by saying investors had oversold the stock, calling it an overreaction to low power prices and mild weather.

The market, he said, wasn't recognizing his company's underlying strength.

--With assistance from Christopher Martin.

To contact the reporter on this story: David R. Baker in San Francisco at dbaker116@bloomberg.net

To contact the editors responsible for this story: Lynn Doan at ldoan6@bloomberg.net, Will Wade, Pratish Narayanan

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