NRG Energy has offered to acquire rival power producer Calpine Corporation in an all-stock deal that values the company at $11.3 billion, the companies said in separate statements.

NRG offered to exchange 0.534 share for each Calpine share, a premium of 6.7 per cent based on the closing prices of the companies' current stock prices.

NRG, based in Princeton, NJ, confirmed the offer, made on 14 May. The bid, initially valued at $22.98 a share, was worth $22.70 a share on Wednesday, putting the cost for 500 million of Calpine shares at $11.3 billion.

San Jose-based Calpine, which emerged from bankruptcy proceedings in January, said the board would review the proposal.

Calpine, with corporate offices in Houston and San Jose, California, had sought bankruptcy protection from creditors in late 2005.

A merger of the two power companies would create a nationwide force for wholesale electricity distribution.

''The merger would create a power provider with four regional businesses spanning all major US power-generation markets and each currently generating at least 8 gigawatts of power,'' NRG said in a statement.

The combined entity would have a market capitalisation of around $20 billion and would provide $100 million in annual savings.

The deal, outlined by NRG's president and chief executive David Crane and chairman, Howard Cosgrove, in a May 14 letter to Calpine chairman William Patterson, would be tax-free for Calpine's shareholders, NRG said.

Besides the scale and geographic diversification, the merger would bring diverse types of fuels, including renewables like geothermal and wind energy, together, the letter said.

NRG said the deal would boost Calpine's financial position, which is "slightly over-levered and relatively short on liquidity.''

Calpine had carry-forward net losses of $5.1 billion.

A deal would allow NRG to expand in California and boost its generating capacity to about 45,000 megawatts. It would also benefit from Calpine's focus on gas generation once the US authorities begin to regulate carbon emissions.

Calpine is the largest US producer of electricity from plants fueled by gas.

NRG has sought a due-diligence financial review of Calpine within three weeks. The deal would, however, be subject to shareholder approval and customery clearance by regulators, NRG said. 

Harbinger Capital Partners funds own more that 24 per cent of Calpine's outstanding shares, making it the largest shareholder.

Harbinger said it had "yet to identify anything objectionable about the offer that cannot be resolved through negotiation." It also asked Calpine to put search for new management on hold so that the NRG offer could be considered.