Dynegy: Pump Up the Volume

(Updated with CreditSights quotes, fresh volume and share price moves.)

HOUSTON (TheStreet) -- Dynegy (DYN Quote) was once again trading higher on heavy volume following a report the company is a likely acquisition target for NRG Energy (NRG Quote).

The Financial Times and MergerMarket reported Tuesday that two industry sources said NRG Energy is seeking a large-scale acquisition within the next 12 months and has Dynegy in its crosshairs.

Dynegy is high on NRG's target list and will likely make a move within the next year, but only when the time is right, one source told MergerMarket. NRG will likely make a move once Dynegy becomes a smaller, leaner company by shedding assets and paying down debt, the source added.

Lately, Dynegy shares were rising by 17 cents, or 7.1%, to $2.56. At 2:30 p.m. EDT Tuesday, more than 34.8 million shares changed hands, compared to the stock's three-month average daily volume of 14.3 million, according to Yahoo! Finance.

On Thursday, Dynegy saw 44.4 million shares change hands, more than three times normal volume, amid early market chatter of a NRG-for-Dynegy deal.

NRG appears to have turned into an acquirer in the space after Exelon (EXC Quote) dropped its $14-billion hostile bid for the company. NRG's shareholders voted in July against adding Exelon nominees to its board of directors.

Dynegy has an 840.2 million-share float with a short interest float of 2.8% as of Sept. 10, according to Yahoo! Finance. NRG, on the other hand, has a float of 264 million and a short interest float of 6.2%. NRG has a market cap of $7.4 billion, compared to Dynegy's $2 billion market cap.