Vistra Energy has bought fellow Texan power producer Dynegy in a deal worth $1.74bn.
The combined company will be worth more than $20bn, inclusive of debt, and have integrated power generating assets and retail businesses across six of the largest electricity markets in the United States.
The ongoing shale gas revolution has had a negative impact on Dynegy, driving electricity prices lower, making such power mergers more commonplace.
Vistra, the largest retailer and generator of electricity in Texas, is based in Irving, while Dynegy is headquartered in Houston but the majority of its power plants are in the northeast United States and Illinois.
Vistra Chief Executive Officer Curt Morgan told Reuters his firm would sell three gas power plants in Texas, which produce a combined 900 MW, to reduce its market share in the ERCOT generating zone which covers most of the state to below 20 per cent, allaying any potential competition concerns.
The combined company, which will have annual earnings before interest, tax, depreciation and amortization (EBITDA) of about $3bn, will serve around 2.9 million retail customers and have around 40 GW of generating capacity.
Vistra said it would achieve an estimated $350 million of annual cost savings through areas such as better procurement practices, as well as additional benefits related to tax and improvements to its balance sheet.