Exelon says 51% of NRG shares tendered for takeover
Exelon Corp. said 51 percent of NRG Energy Inc. holders tendered their shares in support of its $5.5 billion takeover bid that would create the largest U.S. power producer.
The shares were tendered by the deadline of 5 p.m., New York time yesterday, Chicago-based Exelon said today in a statement. Exelon extended the offer a second time to June 26.
With support of a majority of shareholders, Exelon can install its own slate of NRG directors. The company has said it prefers a negotiated deal to a hostile takeover to reduce financing costs and expedite regulatory approval. NRG's board has rejected the offer as too low and conditional.
"The tenders are not binding, so the deal remains uncertain," Nathan Judge, a London-based analyst for Atlantic Equities LLP who rates Exelon shares at "underweight" and owns none, said in an interview. "The results show that the momentum for this deal is slowing, and not enough to force NRG management to accept the deal."
NRG, based in Princeton, New Jersey, is the second-largest power producer in Texas and also owns plants in California and the U.S. Northeast. The acquisition would make Exelon the biggest U.S. power producer, ahead of Atlanta-based Southern Co. and Columbus, Ohio-based American Electric Power Co.
"We urge NRG to move this process forward constructively, allow us to perform due diligence without delay and work with us to conclude a definitive agreement," Exelon Chief Executive Officer John W. Rowe said in today's statement.
NRG will respond to the Exelon announcement this morning, James Golden, a spokesman for the company, said in an e-mail.
Exelon currently is the largest U.S. producer of nuclear power with 17 reactors and owns utilities in Illinois and Pennsylvania. NRG operates and owns 44 percent of the South Texas Project, a nuclear plant southwest of Houston.
Exelon offered 0.485 of a share for each NRG share on Nov. 12, which NRG's board rejected. NRG has said the offer "undervalues" the company and is "highly conditional" and challenged Exelon's projection that it can obtain all state and federal regulatory approvals by year-end.
Exelon has told investors its goal is a negotiated agreement that would leave in place $4.75 billion of senior notes at NRG, reducing refinancing costs that would be required in a hostile takeover. NRG also has about $4 billion of bank debt.
Citigroup Inc. and Credit Suisse Group AG are advising NRG. Exelon's advisers include Barclays Plc, JPMorgan Chase & Co., Lazard Ltd., Loop Capital Markets, Royal Bank of Scotland Group Plc and UBS AG.
Exelon in December applied for approval of the transaction with the U.S. Federal Energy Regulatory Commission. NRG, the International Brotherhood of Electrical Workers, and Public Citizen, a consumer group, called the application premature.
The company also has sought approval of the U.S. Justice Department and the Nuclear Regulatory Commission.
Staff of the California Public Service Commission on Dec. 26 rejected as incomplete an application by Exelon to acquire NRG's district-heating utility in downtown San Francisco.
The announcement was made before regular trading began on U.S. markets. Exelon fell 1 cent to $48.69 yesterday in New York Stock Exchange composite trading. NRG rose 2 cents to $20.62.