Talen Energy Expands and Enhances Portfolio with Best-in-Class CCGT Acquisitions in PJM

Core Viewpoint - Talen Energy Corporation has announced the acquisition of Caithness Energy's Moxie Freedom Energy Center and Guernsey Power Station for a net price of $3.5 billion, which is expected to enhance its operational capacity and financial performance significantly [1][2][3]. Acquisition Details - The total gross acquisition price is approximately $3.8 billion, reflecting an attractive acquisition multiple of 6.7x 2026 EV/EBITDA [2]. - The transaction is projected to be immediately accretive to free cash flow per share by over 40% in 2026 and over 50% through 2029 [2][5]. Strategic Benefits - The acquisition will expand Talen's fleet with modern, highly efficient baseload H-class combined-cycle gas turbines (CCGTs), increasing annual generation capacity by 50% from approximately 40 TWh to 60 TWh [4]. - The plants have an average heat rate of 6,550 Btu/kWh, contributing to significant energy margins and strong cash flow conversion [4]. - The facilities are strategically located with reliable access to gas pipeline infrastructure from the Marcellus and Utica shale formations [4]. Financial Strategy - Talen plans to issue approximately $3.8 billion in new debt to fund the acquisitions and refinance existing debt, maintaining a leverage target of 3.5x or lower by year-end 2026 [5]. - The acquisition supports a target of approximately $500 million in annual share repurchases during the 2026 deleveraging period, with a return to capital allocation of 70% of adjusted free cash flow thereafter [5]. Operational Enhancements - The addition of Moxie and Guernsey enhances Talen's ability to provide reliable, scalable, low-carbon capacity to hyperscale data centers and large commercial off-takers [5]. - The pro forma company will be well-positioned to meet the evolving needs of high-growth sectors requiring 24/7 power demand [5].