Exelon puts on regulatory show; Huntsman makes gains; Genentech shares move closer to bid price

By Cristal Cody

New York, Dec. 18 - Exelon Corp. said Thursday it moved forward with regulatory applications to clear its unsolicited takeover of NRG Energy Inc., but the company's chances are akin to snow in Miami, a market analyst told Prospect News.

Meanwhile, investors flocked back to Huntsman Corp. Thursday to take advantage of the nearly 50% price drop in the stock after its acquisition by Hexion Specialty Chemicals Inc. was canceled Monday.

Genentech Inc. shares also moved closer to the $89-a-share bid from Roche of Switzerland.

Overall pressure on the markets, though, sent stocks tumbling Thursday.

The Dow Jones Industrial Average fell 219.35, or 2.49%, to 8,604.99.

The Standard & Poor's 500 index slipped 19.14, or 2.12%, to 885.28, and the Nasdaq Composite index fell 26.94, or 1.71%, to 1,552.37.

Huntsman stock strategies

Moving ahead to Huntsman, shares rose 21 cents, or 6.65%, Thursday on more than four times the average volume to close at $3.37 after trading as high as $3.64 during the day.

The stock had fallen to below $3 on Monday on the news that the $6.5 billion acquisition had been terminated.

"We bought it under $3 and we expect eventually some more people will go ahead and get the benefit of making that 50 cents," said William Lefkowitz, an options strategist at brokerage firm vFinance Investments in New York. "Even with the market down 200 points, that's pretty good."

Despite the merger termination, investors are paying attention to the bottom line - Huntsman receives a $1 billion settlement from Hexion owner Apollo Management, with the first $500 million due by the end of the year.

Genentech stock moves up

Looking to other merger deals, Genentech's stock rose closer to the $89-a-share bid from Roche.

Genentech shares jumped $1.55, or 1.97%, to close at $80.30 Thursday. The stock has traded from $65.60 to $99.14 over the past year.

Roche offered in July to pay $44 billion to acquire the portion of Genentech's stock it does not already own.

"Over the last week or two, the stock is going up and the market is less volatile," a trader said Thursday. "I would be willing to buy Genentech at $65 even if Roche says tomorrow it's not interested in owning this company."

Exelon puts on show

Moving back to Exelon, the company said Thursday it filed an application with the Federal Energy Regulatory Commission and filed notifications with the U.S. Department of Justice and the Federal Trade Commission of its plans to acquire NRG Energy.

"Our regulatory filings represent an important step in realizing the value of an Exelon-NRG combination, and we will continue to work diligently toward achieving all regulatory approvals and expeditiously consummating the transaction," Exelon president Christopher Crane said in a statement.

NRG Energy fired back Thursday that the filings are premature and "an unnecessary distraction for regulators at this time given the uncertainty of completing the transaction."

After NRG's board turned down Exelon's offer of a fixed exchange ratio of 0.485 of an Exelon share for each NRG share, the company took the offer to shareholders on Nov. 12.

NRG has recommended stockholders do not tender their shares.

The exchange offer expires Jan. 6.

Exelon proposed in the regulatory filing that the combined company could divest three facilities in Texas to comply with antitrust rules.

The Federal Energy Regulatory Commission has an initial 180 days to review an application with the option to extend the review another 180 days, a spokesman said.

Once actual applications are filed with the Justice Department and the Federal Trade Commission, the two agencies will determine which one will review the application, commission spokesman Mitch Katz said.

"The commission and the DOJ decide who will look at it, and one or the other does," he said.

The agencies have 30 days to review the application, though the period may be extended for additional study, Katz said.

Exelon's management just may be dreaming, though.

A market analyst said the company has a snowball's chance in you-know-where of "getting their hands on NRG. The offer price is way, way below reasonable."

A better valuation would be closer to 0.6 of a share of Exelon to one NRG share, the analyst said.

The regulatory notices could help keep the deal on the forefront, but they don't hold a lot of meaning, the market observer said.

Exelon is "riding on a tight schedule so they're making it look like things are going well. It's probably gamesmanship more than anything else," the analyst said.

Exelon shares fell 52 cents, or 0.98%, to $52.58 Thursday.

NRG shares slipped 46 cents, or 2.13%, to close at $21.12.

Mentioned in this article:

Exelon Corp. NYSE: EXC

Genentech Inc. NYSE: DNA

Huntsman Corp. NYSE: HUN

NRG Energy Inc. NYSE: NRG

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