Exelon proposes NRG merger
Exelon Corporation has announced details of a $6.2bn proposal to acquire NRG Energy, a merger that would create the largest US power company in terms of assets, market capitalisation, enterprise value and generating capacity.
Exelon’s unsolicited proposal has offered to acquire all outstanding NRG common stock. The all-stock transaction will have a fixed exchange ratio of 0.485 Exelon shares for each NRG share. This equates to a value of $26.43 for each NRG common share, representing a total value of $6.2bn based on Exelon’s closing price of $54.40 on 17 October 2008. This is a 37% premium to the closing price for NRG shares on the same day, according to Exelon.
In a statement released yesterday, Exelon said the deal would allow NRG shareholders to exchange their stock for Exelon stock, providing “the opportunity to participate in the future growth of the largest and most diversified power company in the nation”.
Combined, the two companies would have a total enterprise value of approximately $60bn and a generating capacity of approximately 47,000 megawatts – “enough to serve nearly 45 million homes,” according to John Rowe, chairman and CEO of Exelon.
In a letter to David Crane, president and CEO of NRG, Rowe said the merger would “address critical national energy needs in a highly effective fashion” and create substantially more value for shareholders in both companies than either could generate alone.
He noted that board, shareholder and regulatory approvals would be required and that the latter may depend on “modest divesture” of some assets in certain markets. However, Exelon has created a divesture strategy to address any concerns regulatory authorities may have in this respect, according to Rowe.
NRG has confirmed receipt of the proposal and said its board of directors would review the details and respond appropriately “in due course”.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@risk.net
More on Regulation
The standoff over separate account margining
CFTC issues sixth extension of no-action relief as long-awaited final rule stalls
Banks fret over vendor contracts as Dora deadline looms
Thousands of vendor contracts will need repapering to comply with EU’s new digital resilience rules
EU banks lose relief on model test after FRTB delay
Deferment of new trading book regime to January 2025 eats into transition period for “erratic” P&L attribution test
Sunday night football and the Basel III endgame
Big banks, political advocates and housing organisations are unlikely allies in race to dropkick new capital regime
Futures exchanges seek clarity on China licensing regime
Hazy details on landmark Futures and Derivatives Law breeds legal uncertainty, unnerving operators
Some EU banks wanted option to start FRTB on time
Representatives of member states raised possibility with European Commission at July meeting discussing the delay
For US Treasury troubles, treat the cause not the symptom
Regulatory alarm about hidden risk in the Treasury futures market misses the point, fund association execs write
Iosco delays pre-hedging consultation to November
Review into controversial practice splits industry