Exelon wins approval for takeover of NRG
Exelon Corp. won approval from federal energy regulators for its $5.2 billion hostile takeover of NRG Energy Inc., in a bid to become the largest U.S. power producer.
The Federal Energy Regulatory Commission voted in favor of Chicago-based Exelon's petition to purchase NRG, creating a company with enough generation capacity to power half of the nation's households. The Justice Department, Nuclear Regulatory Commission and at least five states must still approve the deal.
It was the first hostile takeover ever approved by the agency. FERC Chairman Jon Wellinghoff said agency officials "don't believe we have to see a final term sheet" to determine the offer meets industry standards and is in the public interest.
Exelon has offered 0.485 of a share for each NRG share, a bid repeatedly rejected by Princeton, New Jersey-based NRG as too low. As of Feb. 25, more than 51 percent of NRG shares were tendered in support of Exelon's offer.
The current tender offer expires June 26.
An NRG statement distributed by e-mail said "the board and management team continue to believe that Exelon's proposal significantly undervalues NRG and remains highly conditional, including the need to obtain financing, and very risky because of rating agency and other concerns."
Exelon Chief Executive Officer John Rowe said last month that the bid to acquire NRG may continue beyond the end of this year. Exelon in March proposed expanding NRG's board, with the aim of adding members more receptive to its bid. Shareholders will have a chance to take up the proposal at a meeting this summer, NRG Chief Executive Officer David Crane said last month.
California, New York
In addition to a successful tender offer, state regulators in California, New York, Pennsylvania, Texas and Massachusetts must still approve the combination, as do Exelon shareholders.
Exelon fell 68 cents, or 1.5 percent, to $45.69 as of 12:02 p.m. in New York Stock Exchange composite trading. NRG dropped 70 cents, or 3.5 percent, to $19.19.