Lemon Laws Won't Save Dynegy

If you believe Dynegy's (DYN Quote) account of its planned purchase of energy-trading rival Enron (ENE Quote), it's getting a slightly damaged Mercedes for the price of a Pinto.

At face value, it appears to be a fabulous deal. Dynegy is acquiring a weakened-but-repairable competitor on the cheap. So what's not to like?

The problem is, Dynegy seems to be taking a rather sunny view of Enron's future. Recent earnings restatements and other revelations suggest Enron may actually be a junker when it comes to profitability, though Enron's disclosure practices make it impossible to know for sure. Then there are indications that Dynegy doesn't expect to write down the value of Enron assets by large amounts, which, if true, will certainly raise eyebrows, given the poor performance of many Enron businesses. ...