NRG makes unsolicited $11 bln bid for Calpine
NEW YORK (Reuters) - Power company NRG Energy Inc (NRG.N) has made an unsolicited bid to buy competitor Calpine Corp (CPN.N) for about $11 billion in stock, the companies said on Wednesday.
Calpine, which emerged from bankruptcy earlier this year, said it was reviewing the bid to determine if it was in the best interests of its shareholders.
It said it received the unsolicited proposal from NRG on May 14. Under the terms of that proposal, Calpine shareholders would receive 0.534 shares of NRG stock for every Calpine share.
That would value Calpine shares at around $22.70 a share, giving shareholders a premium of about 6.7 percent based on the shares' Wednesday closing prices.
New Jersey-based NRG said a deal would create a multi-fuel power company with four regional generation businesses in all the major competitive power markets in the United States. It said each of those businesses would have at least 8 gigawatts of existing generating capacity.
"We think what we've put on the table is a compelling value proposition," NRG Chief Executive David Crane said in an interview.
"Our point of view is that the premium we've offered is just one part of the (deal's) value ... these companies together have tremendous value creation potential," he said.
Crane said Calpine's chairman, William Patterson, called on Friday to say they were giving the offer serious consideration, but gave no details on timing or how the board was leaning. He said he had not heard from the Calpine board since.
Calpine emerged from bankruptcy in January with more than $10.6 billion in debt. The company's shares have traded between $15.10 and $21.72 since.
HARBINGER OF DEAL
The bid was initially disclosed earlier on Wednesday when Calpine's largest shareholder, hedge fund Harbinger Capital Partners, released a letter to Calpine's board urging the company to open negotiations with NRG.
Harbinger, which owns more than 24 percent of Calpine's shares, said it believes the offer represents a good starting point and that Calpine's board should immediately negotiate with NRG over terms.
"The timing of this offer is excellent for Calpine, as it has not yet settled on a strategic view or chief executive officer," Harbinger Managing Director Howard Kagan said in the letter.
"NRG offers the combined company a fully focused management team and a well articulated strategy already in place," he said.
NRG has about 23,000 megawatts of generation in the United States and 1,200 megawatts internationally. Its portfolio of power plants includes coal, natural gas and part of one nuclear plant. Continued...
