Exelon Corp, the biggest US operator of nuclear power plants, offered to buy NRG Energy Inc for US$6.2 billion to take advantage of a 55 percent drop in the debt-laden company’s shares since July 1.
Chicago-based Exelon will pay US$26.43 for each NRG Energy share, the company said late yesterday in a statement distributed on PR Newswire. The offer represents a 37 percent premium to NRG’s closing share price on Friday.
A successful acquisition would create the largest US power firm by market value at US$40.4 billion, data compiled by Bloomberg showed.
NRG, the second-biggest electricity generator in Texas, would give Exelon nuclear reactors outside its Illinois and Pennsylvania operating bases.
“An Exelon-NRG combination would result in a total enterprise value of approximately US$60 billion with a generating capacity of around 47,000 megawatts,” chairman John Rowe said in the statement.
“This combination would not only diversify Exelon’s generation portfolio geographically, it would also create immediate earnings and cash-flow accretion,” he said.
The joint company would have 18,000 megawatts of nuclear power generation once the deal is approved, the statement said.
NRG holds US$8 billion in debt with a credit rating of Ba3/B+, the merger statement said. NRG’s market capitalization stood at US$4.6 billion on Friday.
The deal should reduce NRG’s leverage and enhance its credit rating while affecting Exelon’s debt outlook, Exelon said.
Shares in NRG have collapsed 55 percent since July 1 and are down 58 percent from a year ago. The shares closed at US$19.33, up 6.3 percent on Friday.
NRG had been at the center of two unsuccessful takeovers.
NRG’s US$11 billion offer for Calpine Corp, the largest provider of power fueled by natural gas, was rejected in May as inadequate. In August, Calpine ended discussions on a possible merger.
In May 2006, Mirant Corp offered US$7.86 billion for NRG in at hostile takeover. The deal was withdrawn a month later.
NRG was forced into bankruptcy after Enron Corp, the largest US energy trader at the time, collapsed in December 2001 and power prices slid. David Crane joined the company as chief executive officer in 2003 and led NRG out of bankruptcy in December of that year.
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