Adviser urges NRG holders to reject Exelon move

Proxy Governance Inc., a proxy adviser, recommended that NRG Energy Inc. shareholders reject Exelon Corp.'s proposal to expand the company's board and elect nine new independent directors to help win approval of Exelon's $7 billion hostile takeover bid.

Proxy Governance, based in McLean, Virginia, issued its recommendation today in an e-mailed statement. Exelon, the largest U.S. utility owner by market value, urged NRG shareholders in a June 17 solicitation to elect new board members after NRG repeatedly rejected its overtures.

Princeton, New Jersey-based NRG, the second-largest electricity producer in Texas, turned down on July 8 a sweetened offer from Exelon to swap 0.545 share for each NRG share. Exelon had proposed an exchange ratio of 0.485 in October.

"The clear implication of the board's actions since September 2008 is that, far from being entrenched, the company's management and board are open to strategic discussions which might maximize shareholder value," Proxy Governance said in the statement. "The issue remains what it was last September, the question of whether Exelon will pay full value for the company's existing operations and future potential."

NRG dropped $1.61, or 6.7 percent, to $22.37 at 1:16 p.m. in New York Stock Exchange composite trading. Exelon, based in Chicago, fell 30 cents to $48.14.