Kate Mackenzie Exelon walks away from NRG

The epic hostile takeover bid by nuclear power company Exelon for independent rival NRG is over, after NRG shareholders today voted Exelon’s proposal for nine new independent directors.

Exelon’s efforts were considerable. Its all-share bid represented a 37 per cent premium to NRG’s share value when it was first made in October, but this eroded to a few percentage points by mid-June, prompting Exelon to raised the offer in July. NRG fought back by pointing to the regulatory hurdles faced by the deal, which would make the US’ biggest power group, and using its precious cash reserves to make an acquisition of its own.

But above all, it argued that the offer did not value the company adequately. NRG said that the acquisition of RRI Energy added about $4.50 a share, Exelon put the number at $1. Another key rationale for NRG’s argument was its plans to build one of the first new nuclear plants in the US in 29 years. The company is among the frontrunners for government loan guarantees to build a plant.

Its arguments seem to have worked: 75 per cent of NRG shareholders who voted today backed the four existing directors up for re-election, prompting Exelon’s chief executive John Rowe to say in a statement: “The NRG shareholders have spoken, and Exelon will move on. We wish NRG and its owners well.”

Related links:

Exelon moves a step closer to buying NRG (FT Energy Source, 22/05/09)
NRG argues Exelon takeover is not a done deal (FT Energy Source, 26/05/09)
Tide turns on NRG hostile takeover (FT Energy Source, 18/06/09)