Dynegy’s shares rose about 20 percent, while Vistra’s stock inched up 3.6 percent.
Dynegy had a market capitalization of $1.21 billion and Vistra of $8.37 billion as of Tuesday close, according to Thomson Reuters data.
A deal could be announced as soon as next week, the Journal reported.
Vistra and Dynegy were not immediately available for comment.
Reporting by Taenaz Shakir in Bengaluru; Editing by Sriraj Kalluvila