Attached is the latest report on the DYNEGY/ENRON deal from CS First Boston Research. Please feel free to contact us if there is anything we can help you with. 

Thanks,
Hank Emery
Emery Financial Group
of First Union securities
Rocky Emery-Managing Director

This research has been provided to First Union Securities through an arranged relationship with Credit Suisse First Boston(CSFB). Any questions should be directed through your First Union Securities Financial Consultant. Any contact of a CS First Boston analyst or any other CS First Boston representative is strictly prohibited.



THIS FIRST CALL NOTE MUST BE SHOWN IN ITS ENTIRETY, INCLUDING ALL DISCLAIMERS.


CREDIT SUISSE FIRST BOSTON CORPORATION
Equity Research
Americas
Gas Utilities
Curt Launer         212/538-4269     curt.launer@csfb.com
Philip Salles       212/538-4221     philip.salles@csfb.com
Andy DeVries        212/325-2518     andy.devries@csfb.com

STRONG BUY
Target Price: 54.00 (US$)
Dynegy Inc. (DYN)
ENE Deal Shows Risk Coverage & Est & Valuation Upside

Summary

After the close on Friday, DYN confirmed that it would acquire Enron (ENE, 8.63,
Strong Buy) for 0.2685 DYN shares plus assumption of debt and an equity infusion
of $2.5 billion. This values ENE at $10.40 per share based on DYN's Friday
close.

Our initial analyses show the merger to be additive to pro-forma '02 eps for DYN
by 25% to $3.25-$3.30 vs our current estimate of $2.55. We estimate the deal
multiples as about 7x '02 eps, 3.2x '02 cash flow, 0.85x book value and 5x
EV/EBITDA based on our revised '02 estimates for ENE.

We would note that DYN has projected a pro-forma '02 of $3.40-$3.50 per share
before cost savings and synergies.

We expect the deal to close in 9-12 months pending reviews by the SEC, FTC, FERC
and state PSCs. Despite the size of the combined company, we do not expect major
divestitures or closing issues because of the lack of asset concentration and
the inherent competitiveness of the natural gas and power marketing business.

In a report dated Nov 5, we valued ENE at $31 per share. In our view, the deal
valuation includes a differential of $20 per share or $17 billion to account for
ENEs related party and accounting issues. Because these issues threatened ENEs
core businesses, the timing and valuation of the deal for DYN is extraordinarily
attractive. We consider alternate bids for ENE to be possible under these
circumstances.

We expect DYN and other energy merchants to benefit from the removal of risk
that ENE would be downgraded below investment grade or file for bankruptcy
protection.

Pending additional information from conference calls, analyst meetings and other
deal related filings; we are maintaining our reported eps ests for DYN of $2.10
for '01 and $2.55 for '02. Our ENE ests are $1.80 for '01 and $1.60 for '02.
These estimates assume the deal closes in 4Q'02.

Price        Target                     Mkt. Value 52-Week
9 Nov 01     (12 Months)      Div       Yield(%)   ($m) Price Range
38.76($)     54.00($) 0.30    0.7%      14,488.51  57.95 - 31.27
             Annual   Prev.   Abs.      Rel.       EBIDAX   EV/
             EPS($)   EPS     P/E(x)    P/E(%)     ($m) EBIDAX(x)
12/02E       2.55             16.7
12/01E       2.10             20.3
12/00A       1.43             29.9
             Q1       Q2      Q3        Q4
2002E
2001E        0.41     0.40    0.85      0.40
2000A        0.26     0.29    0.55      0.32
ROGIC(12/00A %)               16.1%
Net debt(12/00A $m)           3264
Net debt/Total cap.(12/00A %) 45.4%
Book value/share(12/00A)     11.60
Number of Shares(m)         339.23

1On 11/09/01 the S&P 500 index closed at 1120.31.
2Economic profit trend.

Dynegy is a wholesale and retail energy provider with operations in natural gas,
natural gas liquids, coal, and electricity throughout the U.S. and Europe.

Viewpoint Continued

We maintain our Strong Buy rating for DYN with a target price of $54. We
anticipate growth rate and valuation benefits for DYN that will result in
increasing our estimates and target price as the deal moves closer to closing.

DYN will hold a conference call on Monday, November 12 at 9am EST. The call in
number is 888-603-9706.

N.B.: CREDIT SUISSE FIRST BOSTON CORPORATION may have, within the last three
years, served as a manager or co-manager of a public offering of securities for
or makes a primary market in issues of any or all of the companies mentioned.

CREDIT SUISSE FIRST BOSTON CORPORATION CREDIT SUISSE FIRST BOSTON CORPORATION

Curt Launer         212/538-4269     curt.launer@csfb.com

CREDIT SUISSE FIRST BOSTON CORPORATION  CREDIT SUISSE FIRST BOSTON CORPORATION

Copyright (c) CREDIT SUISSE FIRST BOSTON, and its subsidiaries and affiliates,
2001. All rights reserved.

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= = DYNEGY INC. = = DYN: STRONG BUY
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