Energy Capital Partners (ECP) agrees to sell Cornerstone to Talen Energy

Talen Energy Corporation (“Talen,” “we,” or “our”) (NASDAQ: TLN), a leading independent power producer, announced it has signed definitive agreements to add approximately 2.6 gigawatts of natural gas generation capacity to Talen’s portfolio through the acquisition of the Waterford Energy Center (“Waterford”) and Darby Generating Station (“Darby”) in Ohio and the Lawrenceburg Power Plant (“Lawrenceburg”) in Indiana from Energy Capital Partners (“ECP”). The acquisition will substantially expand Talen’s presence in the western PJM market and add additional efficient baseload generation assets to its fleet.

The acquisition price is $3.45 billion and consists of approximately $2.55 billion in cash and approximately $900 million[1] in Talen stock. The price reflects an attractive multiple of approximately 6.6x 2027E adjusted EBITDA. The transaction is expected to provide immediate and significant adjusted free cash flow per share accretion in excess of 15% annually through 2030E. Additionally, these assets are expected to achieve an approximately 85% unlevered free cash flow conversion rate before recognition of any tax benefits.

“This acquisition further diversifies Talen’s generation portfolio by adding both baseload capacity and strong cash flow contribution and enhances our presence in the western PJM market, which has significant data center tailwinds,” said Mac McFarland, Talen Chief Executive Officer. “The transaction is immediately cash flow accretive and maintains our balance sheet discipline. Following on the heels of our acquisition of Freedom and Guernsey in 2025, it is another great example of our ‘Talen flywheel’ strategy.”

“ECP invested in this portfolio to serve rapid load growth in the Ohio region with efficient, baseload natural gas assets; we continue to believe this is PJM's most exciting narrative,” said Andrew Gilbert, ECP Partner. “Talen has demonstrated that its platform of scale is uniquely positioned to serve PJM’s large customers and, with this transaction, will only be better positioned to do so. As a significant shareholder, ECP is excited to enhance our exposure to Ohio's growth via Talen’s successful flywheel strategy.”

“When this transaction is complete, Talen will have approximately doubled its expected annual generation output inside of two years, meaningfully diversified our fleet, and materially increased our free cash flow per share,” said Terry Nutt, Talen President. “We are also excited to welcome ECP as a significant Talen shareholder.”

 

Key strategic and aquisition highlights

  • Expands and diversifies Talen’s fleet: The 1,218-megawatt Lawrenceburg and 869-megawatt Waterford facilities are highly efficient and modern CCGTs that add both baseload generation and cash flow diversification. The plants have an average heat rate of approximately 7,000 Btu/kWh and capacity factors greater than 80%. Their highly efficient dispatch profile results in significant energy margin, while the low cost and capital requirements provide strong cash flow conversion.  The 480-megawatt Darby facility operates as a peaking unit and can provide attractive commercial flexibility. All three facilities have reliable access to low-cost gas from the Marcellus and Utica shale formations and continue the geographic and fuel diversification reflected by the previous Freedom and Guernsey acquisitions.
  • Enhances patform for data center and large-load contracting: The addition of the facilities to Talen’s portfolio enhances Talen’s ability to offer reliable, scalable, grid-supported, and regionally diverse low-carbon capacity to hyperscale data centers and large commercial off-takers. The expansion of operations in Ohio allows Talen to serve a growing, top-tier data center market. 
  • Unlocks material value day one: The transaction is expected to be immediately accretive to adjusted free cash flow per share by over 15% annually through 2030E.
  • Maintains balance sheet strength: Talen expects robust pro forma cash flows to drive rapid deleveraging with the ability to achieve a net leverage target of 3.5x or lower by year-end 2026.
  • Stock consideration: ECP has agreed to receive approximately $900 million of consideration in the form of Talen equity and will become a significant shareholder post close.

 

Additional transaction details

Talen expects to issue new debt to fund the cash portion of the purchase price.

The transaction is expected to close early in the second half of 2026 and is subject to the satisfaction of customary closing conditions, including the expiration or termination of the waiting period pursuant to the Hart-Scott-Rodino Act of 1976, and regulatory approvals from the Federal Energy Regulatory Commission, Indiana Utility Regulatory Commission and other regulatory agencies.

 

Advisors

RBC Capital Markets is exclusive M&A advisor to Talen. Kirkland & Ellis LLP and White & Case LLP are legal counsel to Talen.

Jefferies LLC and PEI Global Partners are financial advisors to ECP. Milbank Tweed LLP is legal counsel to ECP.

 

[1] 2.4 million shares to be issued to ECP, which is expected to result in ECP owning approximately 5% of pro forma combined Talen equity estimated as of assumed closing date.

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