(Updates with Exelon taking offer directly to NRG shareholders, lawsuit and comments from letter replying to NRG's rejection.)
By Mark Peters and Cassandra Sweet Of DOW JONES NEWSWIRES NEW YORK -(Dow Jones)- Exelon Corp. (EXC) Tuesday said it will take its $6.2 billion offer for NRG Energy Inc. (NRG) directly to the merchant power generator's shareholders, while suing NRG's management, alleging they didn't give due consideration to the bid.
The moves by the Chicago power company come two days after NRG rejected Exelon's unsolicited offer, saying it "grossly undervalues" the Princeton, N.J., company.
The Chicago power company said it will launch an exchange offer Wednesday to pay a fixed exchange ratio of 0.485 Exelon share for each NRG share. The ratio is the same as Exelon announced when it made the unsolicited offer public Oct. 19.
"Based on the positive investor response to our proposal, we expect our exchange offer will garner strong support from NRG shareholders," said John Rowe, Exelon's chairman and chief executive, in a statement.
At the same time, Exelon said Tuesday it filed a lawsuit in Delaware Chancery Court, alleging NRG's directors breached their fiduciary duty by failing to appropriately consider the offer. Exelon is asking the court to enjoin the board from taking any actions to stop the exchange offer, Exelon said.
In a letter to NRG management, Rowe maintained his case for the deal, saying shareholders would be better served through the creation of largest U.S. power company. It also rejected NRG's assertion financing would be an obstacle to closing the proposed deal.
The direct offer to shareholders comes after Exelon's Chief Operating Officer, Christopher Crane, said the company planned to move forward with its original offer despite its rejection by NRG's board.
During a presentation at the Edison Electric Institute Financial conference, Crane said Exelon has already held discussions with some NRG stockholders. However, Crane said that Exelon will walk away if NRG shareholders don't back a deal. "If we hear back from shareholders [and] they're not interested, then we go away."
Exelon said it is also in "final negotiations" with its banks to line up financing for the deal, Crane said, though he declined to give details about how much it would cost or where the financing would come from.
Exelon previously has said its financing plan for the proposed deal would require a negotiated agreement with NRG, so that $4.7 billion of the company's debt would remain in place. That would require Exelon to refinance only $4 billion in NRG debt.
In NRG's rejection of the deal, Chief Executive David Crane voiced concerns beyond price, seeing difficulty in refinancing NRG's debt and potential problems with the credit rating and business mix of the combined company. NRG's Crane - no relation to Exelon's COO - criticized Exelon's so-called hybrid model, which includes both regulated power-delivery businesses and unregulated generation assets.
Exelon's Crane said trying to acquire a different merchant-generation company would be problematic. Companies such as Mirant Corp. (MIR), Dynegy Inc. (DYN) and Reliant Energy Inc. (RRI) would pose market power problems because of the overlap of power plant locations. Additionally, he said the company reviewed Calpine Corp. (CPN), but the idea wasn't pursued because of the dilution to earnings.
"This one is the most compelling," said Exelon's Crane of NRG, as a deal would require the divestiture of only about 3,200 megawatts of plants.
Exelon owns and operates electric utilities in Illinois and Pennsylvania, and power plants throughout the U.S., including the nation's largest fleet of nuclear power plants. NRG owns just power plants with more than 24,000 megawatts of generation.
-By Mark Peters, Dow Jones Newswires; 201-938-4604; mark.peters@dowjones.com
-By Cassandra Sweet, Dow Jones Newswires; 415-439-6468; cassandra.sweet@dowjones.com
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(END) Dow Jones Newswires
November 11, 2008 17:39 ET (22:39 GMT)

Publié le 11 novembre 2008 Copyright © 2008 Dowjones