NRG Energy rejects Exelon’s sweetened $7.45 billion hostile bid

NRG Energy Inc, the second-largest power producer in Texas, has rejected Exelon Corporation's $7.45-billion hostile takeover offer saying that the revised sweetened offer still undervalues the company but it represented a "step in the right direction."

Last week, US Nuclear power giant and utility operator, Exelon Corporation, raised its $6.2-billion hostile takeover bid for NRG Energy by 12 per cent to $7.45 billion in a bid to sway NRG Energy's shareholders ahead of the company's annual meeting on 21 July. (See: Exelon raises hostile takeover bid for NRG Energy to $7.45 billion)

NRG Energy, today announced that its Board of Directors unanimously determined that the 2 July revised unsolicited proposal from Exelon Corporation significantly undervalues NRG and is not in the best interests of NRG's stockholders.

NRG said in a release, ''While your revised offer is not acceptable as is, it certainly represents a step in the right direction and is a welcome development after more than eight months of the 0.485 offer.''

In November 2008, Princeton, New Jersey-based NRG Energy had rejected the hostile takeover offer from Exelon saying that the offer significantly undervalued the company and the offer was "opportunistically timed" since the all-stock bid came after NRG lost half of its market value in two months. (See: NRG Energy rejects $6.2 billion unsolicited bid from Exelon Corp. as undervalued)

But, today's rejection comes with a cue that Exelon should raise its offer even higher if it wants to see the merger go through, by saying, ''The fact that you were able to increase your offer largely through over $200 million per year of newfound synergies identified by your consultants leaves open the possibility that, if you would properly recognise the value created by NRG itself, you would be able to increase your current 0.545 offer by a substantial amount.''