NRG Energy says Exelon offer continues to undervalue the company

By Angela McDaniels

Tacoma, Wash., July 16 - In response to Exelon Corp.'s attempts to persuade NRG Energy, Inc. shareholders to elect its nominees to the NRG board, NRG said on Thursday that Exelon does not need any board representation to conclude a "fair deal" with NRG.

"NRG's management and board of directors are always receptive to any credible offer that fairly values NRG," the company said in a letter to shareholders.

NRG has repeatedly rejected Exelon's offer to acquire the company as inadequate.

Exelon is offering 0.545 of a share of its common stock in exchange for each NRG share. Based on Exelon's closing share price of $51.66 (NYSE: EXC) on Wednesday, the offer is valued at $28.15 per NRG share.

NRG's letter follows Exelon's statement on Wednesday that it will abandon its efforts to acquire the company if NRG shareholders elect no new directors at the upcoming annual meeting on Tuesday. Exelon said its nominees, if elected, will "open the door" to negotiations with NRG.

As previously reported, Exelon wants NRG shareholders to vote the blue proxy card to elect four independent candidates to run in opposition to incumbent directors, to expand the NRG board to 19 directors and to elect five independent candidates nominated to join the expanded board.

Exelon raised its offer on July 2 from 0.485 of an Exelon share per NRG share. NRG said the increase has failed to impress stockholders or analysts.

As an example, NRG cited analyst Brian Russo of Ladenburg Thalmann. According to NRG, Russo raised his price target on NRG to $37.00 per share from $35.00 on July 9 and said, "We are not surprised that NRG rejected the revised EXC offer and we share NRG's view that the revised offer still undervalues NRG's asset base, free cash flow capabilities, the accretive Reliant retail acquisition, and inclusion of NRG nuclear project for DOE loan guarantees."

Exelon is a utility services holding company based in Chicago.

NRG Energy is a wholesale power generation company based in Princeton, N.J.

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