NRG tells shareholders to reject Exelon's $6 Billion bid

26 November 2008

NRG Energy Inc. the developer and manager of energy-related operations, has asked its shareholders to reject a hostile $6 billion takeover bid from Exelon Corp.

If successful, the bid could create the largest US power producer.

In a filing with the US Securities and Exchange Commission (SEC), NRG said that a combination with Exelon would dilute, and may even derail NRG's growth. The company, which is based out of Princeton, New Jersey, is currently the second-largest power producer in Texas, just behind the closely-held Energy Future Holdings Corp.

Exelon's bid offers 0.485 of a share for each NRG share directly to holders as of  12 November. Three days earlier, on 9 November, the NRG's board had turned down an identical offer, saying that it was too cheap and potentially risky for investors. In an interview with the media, NRG chief operating officer Robert C Flexon said that since the price was the same, "so the answer is the same."

The filing says that a discussion between the two companies, facilitated by JPMorgan Chase & Co on 2 September, ended on 30 September, at a meeting in New York, when Exelon CEO John W Rowe did not want to discuss an exchange ratio of Exelon shares for those of NRG.

With the regulatory filing in place, NRG's management is now free to hold meetings on the bid with individual shareholders.