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.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
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. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
More on Regulation
Prop shops recoil from EU’s ‘ill-fitting’ capital regime
Large proprietary trading firms complain they are subject to hand-me-down rules originally designed for banks
Revealed: the three EU banks applying for IMA approval
BNP Paribas, Deutsche Bank and Intesa Sanpaolo ask ECB to use internal models for FRTB
FCA presses UK non-banks to put their affairs in order
Greater scrutiny of wind-down plans by regulator could alter capital and liquidity requirements
Industry calls for major rethink of Basel III rules
Isda AGM: Divergence on implementation suggests rules could be flawed, bankers say
Saudi Arabia poised to become clean netting jurisdiction
Isda AGM: Netting regulation awaiting final approvals from regulators
Japanese megabanks shun internal models as FRTB bites
Isda AGM: All in-scope banks opt for standardised approach to market risk; Nomura eyes IMA in 2025
CFTC chair backs easing of G-Sib surcharge in Basel endgame
Isda AGM: Fed’s proposed surcharge changes could hike client clearing cost by 80%
UK investment firms feeling the heat on prudential rules
Signs firms are falling behind FCA’s expectations on wind-down and liquidity risk management