In an October contribution to Deal Journal, retired M&A lawyer Ronald Barusch posed the question: Has Carl Icahn outsmarted Blackstone (NYSE: BX)? The tentative answer today appears to be yes.

Icahn has agreed to buy Dynegy (NYSE: DYN) for $5.50 per share, while expressing a willingness to entertain any higher bids that might emerge in the "go-shop" period. After seeing its prior lowball bid for the company rejected by shareholders, Blackstone itself may yet prove to be the ultimate buyer. That would be the real coup for Icahn.

As pointed out by Mr. Barusch, one of the canniest moves by Icahn was to avoid the gigantic $50 million breakup fee by waiting until after the shareholder vote to bring forward his proposal to acquire the company. By first agitating against the Blackstone deal, and only then making an offer following the vote, Icahn's reduced his costs considerably.

Now the best outcome for Icahn, as well as other Dynegy shareholders, would be to see Blackstone step in here with a sweetened bid of, say, $6 per share. The thinking is that the buyout shop can afford this ticket price, especially considering the agreement it's lined up to sell some of Dynegy's natural gas-fired plants to competitor NRG Energy (NYSE: NRG) for $1.4 billion. That asset sale would fund a big piece of the deal.

As for the worst outcome, Icahn would get stuck with Dynegy. This doesn't strike me as a terrible outcome. Icahn would be buying at a relatively low ebb in the cycle, with power prices depressed by a natural gas glut. Dynegy should have brighter days ahead and net Icahn a solid return even if he can't flip the company in the near term.

Despite his concurrent failure to shake up the board over at Lions Gate Entertainment (NYSE: LGF), I've got to say -- the guy's good.

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