Dynegy to Acquire Illinova for $1.75 Billion

Dynegy Inc., a natural-gas and electric company, agreed to buy Illinova Corp. for about $1.75 billion in cash and stock to gain power plants in the Midwest that can ship electricity to major U.S. markets. Houston-based Dynegy, which had sales of $14.3 billion last year, also will assume $2.25 billion in debt in the deal. Decatur, Ill.-based Illinova, which sells power to 650,000 customers in the state, had $2.43 billion in sales last year. San Francisco-based Chevron Corp., which owns 29% of Dynegy, would invest $200 million and retain a 24% interest in the new company. The new company, to be called Dynegy Inc. and based in Houston, will have power plants that can produce 15,000 megawatts, enough to light about 15 million homes. On the New York Stock Exchange, Dynegy shares fell 44 cents to close at $18.25, Illinova gained 31 cents to close at $25.63, and Chevron rose $1.69 to close at $94.75.