* Exelon says 12 pct of NRG shares tendered under offer
* NRG cites decline in premium in hostile offer
* NRG shares off 0.4 pct, Exelon slips 0.5 pct
NEW YORK, June 17 (Reuters) - Power company Exelon Corp EXC.N said on Wednesday support for its $6.2 billion hostile bid to buy NRG Energy NRG.N had shrunk with just over a month left before a key vote at NRG's annual shareholders meeting.
In a letter sent to NRG shareholders, Exelon reiterated its intent to buy the company, but said that as of June 16, about 12 percent of its target’s outstanding shares had been tendered under its offer, well below the 51 percent it had received in February.
Exelon extended the expiration date for its exchange offer 0.485 of its shares per NRG share to Aug. 21 after NRG set its annual shareholders meeting for July 21.
Shareholders will decide at that meeting whether to back proposals by Exelon to expand the NRG board and elect up to nine new members backed Exelon.
Chicago-based Exelon, which owns the nation’s largest nuclear power fleet as well as utilities in Illinois and Pennsylvania, said the drop was not surprising.
“Investors typically withdraw tendered shares between expiration dates, and do not re-tender until very close to the next scheduled expiration date,” William Von Hoene, Exelon’s general counsel, said in a statement.
NRG said the drop in support was due to the shrinking premium in the offer for its shares.
Based on current prices, Exelon’s offer was worth about $23.56 per share, a 3 percent premium over the current NRG share price and well below the 37 percent premium the offer represented when it was unveiled in October.
Analysts said the likelihood that Exelon would have to refinance as much as $8 billion of NRG’s debt if the takeover could prevent it from raising its bid.
Despite the pressure to increase its price, “its ability to do so is constrained by rating agency pressure to issue $1.0 billion of equity following the acquisition to pay down debt and sustain its investment grade rating,” analyst Hugh Wynne of Bernstein Research said in a note to investors.
Exelon’s board is expected to decide whether to proceed and on what terms it would go forward at a June 30 board meeting.
Shares in NRG were down 0.4 percent to $22.81, while Exelon shares were off 0.5 percent at $48.68 on the New York Stock Exchange.
Reporting by Matt Daily; Editing Bernard Orr
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