NRG shareholders reject Exelon, ends takeover bid
COLUMBUS, Ohio - Exelon, parent company of Chicago-based ComEd, said Tuesday it has ended its $7.4 billion bid to create the nation's largest power generating company by buying power generator NRG Energy.
Chicago-based Exelon Corp. withdrew its offer shortly after NRG shareholders rejected a proposal that would have expanded NRG's board, preferably with new and existing seats going to people who would support the takeover.
Princeton, N.J.-based NRG has rejected two offers for the company from Exelon, calling them undervalued.
The deal would have created a company big enough to provide electricity to about 45 million homes.
NRG said a preliminary vote count at its annual meeting showed shareholders voting to re-elect the company's nominees to the board over a slate of nominees from Exelon. At the same time, they also rejected Exelon's bid to expand the board and fill the five spots with its nominees.
NRG did not release a vote count. It said final results will be released in August.
"NRG stockholders understood that this vote was all about value and they voted overwhelmingly to send a message that Exelon's current offer was unfair to NRG stockholders," David Crane, president and CEO, said in a statement.
Crane said the company will continue to evaluate offers from Exelon and any other company.
"We are a willing seller," he said in a July 8 telephone interview. "We just want to be at a right price and on fair terms."
Exelon said in a statement that after bidding twice for NRG, it was unwilling to sweeten its offer again.
"NRG shareholders have spoken, and Exelon will move on," said John Rowe, Exelon's chairman and CEO.
He said he was unwilling to raise the offer to a level that would "undermine Exelon's own value proposition."
NRG is better off now that it can focus on running its business, said Brandon Blossman, an analyst at Tudor Pickering Holt & Co. in Houston.
"They've done a good job of staying relatively focused on their business throughout the summer while doing a hostile- takeover defense," Blossman said. "The management team proved itself over the course of the summer, and now they have an obligation and something to prove going forward."
Exelon made its initial offer of .485 shares for each NRG share in October at a time when the declining stock market had whacked NRG's shares. Exelon raised the offer by 12 percent to .545 shares earlier this month.
Exelon, with nearly $19 billion in annual revenue, has 5.4 million electric customers in northern Illinois and Pennsylvania. It also has 480,000 natural gas customers in the Philadelphia area.
NRG's power plants have 24,000 megawatts of generation capacity, enough to supply more than 20 million homes. Its retail business, Reliant Energy, serves more than 1.7 million residential, business, commercial and industrial customers in Texas.
Today's defeat marks the third acquisition in six years that Exelon has dropped, stalling Rowe's quest to gather scale needed to help fund expansion, capitalize on climate legislation and cope with recessions.
Exelon dropped its agreement to buy New Jersey's Public Service Enterprise Group Inc. for $17.8 billion in 2006, after failing to reach agreement with regulators on concessions needed to get the deal approved. In 2003, Exelon halted plans to buy Dynegy Inc.'s Illinois Power Co. utility after lawmakers failed to pass a bill needed to make the purchase viable.
NRG is the second-biggest power producer in Texas, the largest power-consuming state.