Exelon bid for NRG turns hostile
PHOENIX (Reuters) - Exelon Corp (EXC.N) launched a hostile bid for NRG Energy Inc (NRG.N) on Tuesday, two days after the power producer rejected its $6 billion-plus offer.
In addition to taking its offer directly to NRG shareholders, Exelon also filed a lawsuit against both the company and its directors and told NRG that it would attempt to nominate its own slate of directors to its board.
"Their decision to reject our proposal, without any discussion with us as to the merits or structure of our proposal, has left us with no choice but to bring the offer directly to the NRG shareholders," Exelon Chairman and Chief Executive John Rowe said in a statement.
Exelon said it launched an exchange offer for all the outstanding shares of NRG at a fixed exchange ratio of 0.485 Exelon shares for each NRG share. At the same time, it filed a lawsuit in Delaware Chancery Court against NRG and its directors alleging they failed to give appropriate consideration to Exelon's offer.
NRG responded by advising shareholders not to take any action while its board reviews the proposed exchange offer.
In addition, Princeton, New Jersey-based NRG publicized a letter it received from Exelon Deputy General Counsel Bruce Wilson that said Exelon planned to present a proposal at NRG's annual meeting that would expand its board of directors. In the letter, Wilson said Exelon planned to nominate its own slate of directors to fill the vacancies.
The letter also gave NRG until November 18 to respond.
"If we do not receive your written confirmation ... we will assume NRG does intend to contest Exelon's right to take such action and that a dispute exists between the parties as to this issue," Wilson wrote.
'VERY SWEET AS IT IS'
The announcement of Exelon's exchange offer came hours after its chief operating officer, Christopher Crane, said the company had no plans to sweeten its offer for NRG.
"We think the offer is very sweet as it is," Crane told the EEI Financial Conference in Phoenix. "The offer is the offer."
On Sunday, NRG rejected the unsolicited offer from Exelon, saying it significantly undervalues the company.
Rowe disputed that point in his letter to NRG management, saying "the combination of NRG and Exelon will create substantially more value for both companies' shareholders than either company can realize alone."
The combined company would be the largest U.S. power company, with generating capacity of about 47,000 megawatts, or enough to serve nearly 45 million homes, Exelon has said.
Exelon's offer for NRG represented a 37 percent premium over NRG's closing price before it was announced last month. Crane said between $1.5 billion and $3 billion of cost savings and value could be achieved through the takeover. Continued...
