Energy Supplier Makes Offer for Competitor Magma Power : Energy: If the $840-million offer is accepted, the deal would merge the nation’s two largest geothermal producers.

In a bid to buy one of its major competitors, California Energy Co. made an unsolicited $840-million tender offer Monday for San Diego-based Magma Power Co.--a deal that would merge the nation’s two largest independent geothermal energy producers.

California Energy offered $35 a share for each of Magma Power’s 24 million outstanding common shares, consisting of $25 in cash and $10 in California Energy common stock.

Wallace Dieckmann, chief financial officer for Magma Power, said he could not comment on the offer because his company had not yet received the California Energy proposal. Magma Power has 350 employees, of whom 35 work at the company’s headquarters in San Diego and the remainder at power plants in the Imperial Valley.

Trading in both companies’ stock was halted late Monday pending news of the acquisition offer. California Energy shares were unchanged at $17 on the New York Stock Exchange, while Magma Power shares were down $.75 at $27.50 in over-the-counter trading.

California Energy, based in Omaha, spelled out its tender offer in a letter Monday from its chairman, David Sokol, to Magma Power’s chief executive and board of directors.

Sokol said the companies have discussed a business combination on several occasions and that he hoped the transaction could be completed on a friendly basis. But he warned that his company was prepared to go directly to Magma’s shareholders with a tender offer.

California Energy has more than $300 million cash on hand, Sokol said, and should have no difficulty acquiring additional financing for the acquisition.

“We are, of course, prepared to negotiate in good faith all aspects of our proposal and to work out the terms in a mutually satisfactory merger agreement, containing terms and conditions typical for a transaction of this type,” Sokol said in his letter.

A Wall Street energy analyst who asked not to be identified said both companies are competing in the booming geothermal markets in the Far East. A merger might cut costs and reduce competition for California Energy, he said.

Both companies are looking to the Philippines and Indonesia for future growth. Magma Power recently signed a deal to operate a 216-megawatt plant on the Philippine island of Leyte to be completed in 1997 pending financing arrangements. California Energy has deals to build plants totaling 300 megawatts in the Philippines.

“The two of us used to compete in the domestic U.S. market for power generation,” Sokol said. “The market has shifted very dramatically in the last year to where our primary growth prospects are international. It is a very different marketplace.

Magma Power operates seven geothermal plants in Imperial Valley that generate 244 megawatts of power. Last year, the company reported profits of $52.1 million on revenue of $167 million. It sells all of its energy to Southern California Edison.

Magma Power is 21% owned by Dow Chemical, whose engineers developed the technology that harnessed the Imperial Valley’s superheated brines--fluids thick with dissolved solids that circulate below ground at temperatures of up to 550 degrees.

Magma also owns or leases about 200,000 acres for possible future geothermal development. Magma Power’s management in recent years has been dominated by ex-Dow Chemical executives.

California Energy operates six geothermal plants that generate 300 megawatts of power, all but one of which are located in the Coso geothermal field near Mammoth Lakes. The company reported a profit of $42.5 million on revenue of $132 million last fiscal year.

One of the company’s major shareholders is the Kiewit family, owners of an Omaha-based construction firm, Peter Kiewit Sons.