What happened 

Shares of Calpine Corporation (NYSE: CPN) jumped as much as 10.4% in trading Friday after the wholesale utility company agreed to sell itself to a group led by private equity firm Energy Capital Partners for $5.6 billion. The offer price is $15.25 per share in cash, which is still a small premium from where shares are trading, at $14.85 at around 3:00 p.m. EDT. 

So what

Wholesale power markets have been hammered in recent years as cheap natural gas and zero marginal cost wind and solar power have taken away a lot of the formerly peak energy prices. Calpine and most of its competitors have seen earnings shrink as a result and that's called into question how the company will pay back $11.9 billion in debt. 

Power plant with the sun in the background.

Image source: Getty Images.

What Energy Capital Partners sees is a cash flow business that could improve in the future. The company still expects $875 million to $1,025 million in cash from operations this year and $1.8 billion to $1.95 billion in adjusted EBITDA. 

Now what

Shares have a small amount of upside for investors who want to hold out until the buyout takes place at $15.25 per share. The risk is that, in the due diligence phase, Energy Capital Partners will back out if it finds something materially wrong with the business or financial markets go into turmoil. If you're not willing to take on that risk, you should take some gains off the table now because it's unlikely a buyer will emerge with a better offer than what Calpine got today.