US companies Dynegy Inc and Illinova Corp are planning a merger, mostly through a stock transaction, in a deal valued at around $2 billion. The combined company will retain the name Dynegy. It will have an annual revenue of around $17 billion and a market capitalisation of around $7.5 billion.

Once the merger has been completed, Dynegy plants to spend around $5 billion to buy or build power plants. The company is planning an aggressive expansion programme to take advantage of the newly deregulated gas and electricity markets in the USA.

The combined company has an extensive fleet of power plants, mainly in California and the Midwest United States. It intends to expand this fleet by investing around $1 billion a year on additional plants, focussing on the southeast and mid-Atlantic regions.