Exelon defeats NRG bid to block takeover
NRG Energy Inc., owner of power plants in Texas, California and the U.S. Northeast, lost a legal bid to temporarily block Exelon Corp.'s $6.2 billion exchange offer.
NRG sued Exelon, the largest U.S. operator of nuclear power plants, to temporarily thwart the bid, which NRG rejected as too low.
"Despite NRG's many attempts to obstruct Exelon's offer, Exelon remains committed to a combination with NRG that delivers value for shareholders of both companies," William Von Hoene, an Exelon executive vice president, said in a statement today. A federal judge threw out the suit on June 19.
NRG, based in Princeton, New Jersey, claimed Exelon was pressuring shareholders in violation of the Williams Act, a 1968 law on acquisitions. NRG asked that Exelon be ordered to withdraw its offer for at least 60 days and to make additional disclosures.
"NRG continues 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," the company said in a statement today.
Proxy Fight
Lawyers for NRG argued Exelon couldn't afford to close on the takeover offer because that would significantly increase the company's debt. The offer is designed to pressure the smaller company into cooperating in a transaction requiring Exelon to take on less debt, the attorneys said in court.
U.S. District Judge John Koeltl in Manhattan ruled that "Exelon is entitled to a judgment dismissing NRG's complaint," according to court records. "The court notes, however, that NRG is free to make its case to its shareholders as to why the exchange offer should be rejected."
On June 17, Chicago-based Exelon began its proxy fight and extended its exchange offer, filing a solicitation asking NRG owners to expand their company's board and elect nine independent nominees. Exelon also pushed back the deadline for an offer made directly to stockholders after NRG twice rejected the bid as too low to Aug. 21 from June 26.
The filing came almost eight months after the NRG bid was announced.
The case is NRG v. Exelon, 09-2448, U.S. District Court, Southern District of New York (Manhattan).