Exelon claims NRG shareholder support for merger
Exelon said that shareholders representing over half of NRG Energy's common stock support its proposed merger. However, NRG's board maintains that Exelon's offer is not in its shareholders' interest, but it is open to an agreement with the company.
Exelon said that shareholders representing over half of NRG Energy's common stock support a merger of the two firms. However, NRG's board maintains that Exelon's offer is not in its shareholders' interest, but it is open to an agreement with the company.
Exelon announced that, as of 25 February, shareholders had tendered 125,403,103 shares of common stock of electricity generator NRG Energy in its exchange offer, representing over 51% of all outstanding shares of NRG common stock.
The company made an offer on 19 October 2008 to acquire NRG in a stock-for-stock transaction, with NRG common shareholders exchanging their stock for Exelon stock at the fixed ratio of 0.485 Exelon shares per NRG share. The deal would have valued NRG at around $6.2 billion. In November, the board of NRG unanimously rejected Exelon's bid for the company, saying the unsolicited offer grossly undervalues the company and is not in the best interests of its shareholders.
In early January, Exelon said that shareholders had tendered shares of stock representing almost 46% of all outstanding shares of NRG common stock. It announced then that it would extend its exchange offer until 25 February.
John Rowe, Exelon chairman and CEO, commented: "Yesterday's result delivers another clear and convincing message to NRG's board and management that a majority of the company's owners support Exelon's offer to combine the two companies. Unfortunately, this is a message the current NRG board and management have apparently chosen to ignore."
He added, "If NRG still refuses to listen to its shareholders, we will have no choice but to press forward to seek election of an expanded NRG board with new independent directors who will act in the best interests of the NRG shareholders and consider the merits of an Exelon and NRG combination in comparison with any other strategic alternatives available to NRG."
Exelon also announced that it has extended its offer until 26 June. It said that the extended expiration date enables Exelon to focus on seeking regulatory approvals for the transaction and the solicitation of proxies for the election of NRG directors at the NRG annual meeting of shareholders, which has not yet been scheduled.
NRG responded to Exelon's announcement by saying, "NRG's management and board of directors remain open to considering a transaction with Exelon at a fair exchange rate and on reasonable terms. Unfortunately the current Exelon offer, which remains unchanged, has neither."
The company added, "NRG believes in industry consolidation and remains open to being a seller at an appropriate price that compensates NRG stockholders for the value and risks of a transaction. This includes considering a transaction with Exelon."
However, NRG noted, "Exelon's unsolicited takeover attempt remains highly conditional, requiring approval by the stockholders of both companies, the arrangement of expensive debt financing and a favourable reaction from the credit rating agencies. In addition, Exelon must also meet the regulatory requirements of three federal agencies and five states, the timing and outcome of which remain uncertain."
If the NRG-Exelon merger goes ahead, it would create the largest power firm in the USA with 47,000 MWe of generation capacity, including 18,000 MWe from nuclear power plants.
