Talen Energy Corporation (NASDAQ:TLN) shares are trading higher Friday after the company announced it signed definitive agreements to acquire two major natural gas-fired power plants.
What To Know: The deals include the purchase of Caithness Energy's Moxie Freedom Energy Center in Pennsylvania and Caithness Energy and BlackRock's Guernsey Power Station in Ohio. Both facilities are combined-cycle gas turbine plants located within the PJM power market, one of the largest electricity markets in the United States.
The total gross acquisition price is approximately $3.8 billion, with a net price of $3.5 billion after factoring in expected tax benefits. Talen said the purchase reflects an acquisition multiple of 6.7 times 2026 enterprise value to EBITDA, which the company considers favorable compared to the cost of constructing new combined-cycle plants. The company expects the acquisition to be immediately accretive to free cash flow per share, projecting a gain of over 40% in 2026 and more than 50% through 2029.
According to Talen's CEO Mac McFarland, the deal strengthens the company's generation portfolio by adding modern, highly efficient baseload capacity, boosting annual generation by 50% from around 40 terawatt-hours to approximately 60 terawatt-hours. The plants benefit from access to natural gas infrastructure tied to the Marcellus and Utica shale regions, known for abundant supply and strong pipeline connections.
Talen highlighted the strategic value of the acquisitions for expanding its position in the data center and large-load energy markets. The new assets are expected to enhance the company's ability to deliver reliable, low-carbon power for high-demand sectors requiring consistent energy supply.
To finance the deal, Talen plans to issue roughly $3.8 billion in new debt, using both secured and unsecured instruments. The company stated it remains committed to maintaining balance sheet discipline, aiming for a leverage target of 3.5 times or lower by the end of 2026. The acquisitions are expected to close in the fourth quarter of 2025, pending regulatory approvals, including clearance from the Federal Energy Regulatory Commission.
The company also announced it will report its second quarter 2025 financial results on Aug. 7, with management set to hold an earnings call that morning. The acquisitions and the projected financial benefits appear to have driven strong investor interest, leading to Wednesday's significant stock price increase.
TLN Price Action: Talen Energy shares were up 13.6% at $300.00 at the time of writing, according to Benzinga Pro.
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