Vistra Expands Gas Fleet With $4 Billion Cogentrix Acquisition

Core Viewpoint - Vistra Corp. is expanding its U.S. generation footprint by acquiring the Cogentrix Energy portfolio for approximately $4 billion, which includes assumed debt and tax benefits [1][6]. Acquisition Details - The acquisition adds about 5,500 megawatts of modern natural gas-fired capacity to Vistra's fleet, enhancing its presence in key North American power markets: PJM, ISO New England, and ERCOT [2][5]. - The deal values the portfolio at approximately $730 per kilowatt of capacity, net of expected tax benefits, translating to an enterprise multiple of around 7.25 times expected 2027 adjusted EBITDA [3]. Financial Impact - The transaction is expected to be accretive to ongoing operations' free cash flow per share starting in 2027, with mid-single-digit accretion initially and high single-digit accretion on average through 2029 [3]. - Vistra plans to pay about $2.3 billion in cash and issue approximately $0.9 billion in stock, while assuming around $1.5 billion in existing Cogentrix debt [6]. Asset Composition - The portfolio consists of ten gas-fired facilities, including seven combined-cycle plants, two combustion turbine facilities, and one cogeneration plant, with an average heat rate of around 7,800 Btu/kWh, indicating efficiency compared to the existing U.S. gas generation base [4]. Strategic Positioning - The acquisition deepens Vistra's exposure to constrained and fast-growing power markets, adding over 3,100 MW in PJM and approximately 1,750 MW in ISO New England, along with a 583 MW cogeneration facility in ERCOT [5]. - Management emphasizes that the acquisition aligns with Vistra's disciplined capital allocation strategy and long-term leverage target of below 3x, while maintaining plans to return capital to shareholders through dividends and share repurchases [7].