Dynegy and Enron Corp. were in negotiations to cut the price of the former's $9 billion buyout offer by more than 40 percent to $5 billion, The Wall Street Journal reported. Following the news, shares of financially troubled Enron fell to their lowest value since late 1987. The company's stock slide, coupled with investors shying away from its prized energy-trading business, raised questions about whether it can keep Dynegy interested, analysts said. The merger between the Houston-based companies contains a clause that would allow Dynegy to back out on payment of $360 million in penalties if Enron incurs a serious loss in business or assets. Dynegy still is moving forward with the acquisition, however, a spokesman said.
Two major insurance companies, the Chubb Group and American International Group, have joined financial giant Goldman Sachs in forming a consortium to be based in tax-free Bermuda, the Financial Times reported. The new entity, to be known as Allied World Assurance Holdings, will offer reinsurance to other carriers and will underwrite commercial property and casualty coverage. The holding company and a wholly owned subsidiary, Allied World Assurance Co., will have initial capitalization of $1.5 billion and aims to open for business by Dec. 3.
A leading maker of warplanes, BAE Systems, will abandon the short-haul commercial aviation business and cut 1,700 jobs, reports said. All of the layoffs will come in Britain, where the company is based. Earlier this year, BAE cut 2,000 jobs because of a slump in orders for its Harrier, Tornado, and Hawk combat jets.