The fight over Dynegy is not over yet. Despite joining forces to block the Blackstone group’s takeover of the US power producer late last year, Carl Icahn, the largest holder of Dynegy shares, and Seneca Capital, the second largest owner of Dynegy shares,  have since parted ways.

Mr Icahn has made his own bid for Dynegy, and Seneca believes it undervalues Dynegy – the same argument Mr Icahn and Seneca made to convince shareholders to block the Blackstone takeover.

While Mr Icahn seeks shareholder support for his bid, Seneca is proposing that shareholders replace two board members and repeal bylaws blocking takeovers that do not have board approval.

Dynegy has cancelled its deal to sell out to Blackstone, after the proposed $4.7bn deal failed to get enough shareholder support.

Sheila McNulty has the news from Houston:

The group also said it would solicit alternative proposals and review its standalone restructuring alternatives, in a statement issued early on Tuesday before voting was due to close later in the day on the Blackstone buy-out.

Dynegy said it would contact a broad group of potential buyers, including its two largest investors, the hedge fund Seneca Capital and activist investor Carl Icahn, after they had both rejected the Blackstone deal as inadequate. It invited other interested parties to contact the company or its advisers.

But will Icahn or Seneca be forthcoming? I’ll leave you to read Sheila’s previous posts on this:

- Icahn and Seneca have spooked Dynegy’s shareholders
- Where were Icahn and Seneca when Dynegy was looking for a buyer?

Dynegy’s decision to delay for a week the close of voting on its buyout by Blackstone indicates not quite enough shareholders are on board. If they were, the votes would have been tallied on Wednesday, as planned, and the deal completed.

Dynegy says it had to give shareholders more time because Blackstone revised its offer price late on Tuesday, and they needed more time to consider the new offer. But in this world of instant information, anyone involved would have had ample time to learn of the new $5.00 a share offer, up from $4.50, with plenty of time to change their vote.