NRG Again Rejects Exelon Bid: Boosts 2009 Expectations

NRG Energy Inc. (NRG) on Wednesday rejected Exelon Corp.'s (EXC) boosted takeover offer, saying the $7.16 billion bid "continues to substantially undervalue" the electricity concern.

NRG also raised its 2009 earnings forecast to reflect results from its May acquisition of Reliant Energy's Texas retail business and higher margins in its retail business. It also increased the size of its share repurchase plan by 52% to $500 million, which it expects to complete by the end of the year.

Exelon, after nearly 8 months, boosted its takeover offer by 12% last week, calling it its last and final offer, after finding $1.5 billion in additional synergies. But in a letter to Exelon Chairman and Chief Executive John W. Rowe, NRG Chairman Howard Cosgrove and President and CEO David Crane said the Exelon effort still falls well short, contending the Reliant Energy purchase adds $4.50 a share in value to NRG, not the less that $1 they said has been ascribed by Exelon.

They also highlighted the company's 2009 forecast for earnings before interest, taxes, depreciation and amortization of $2.5 billion, excluding items. The prior view was $2.18 billion and the new forecast would put annual Ebitda growth the past six years at 21%.

Exelon boosted the offer after coming under increasing pressure in recent months to raise the bid as recent stock prices provided little, if any premium for NRG shareholders. Exelon is seeking to create the largest U.S. power generator by output, saying the combined company would have a significant presence in five major markets, including Texas, California and the Northeast, and be better positioned to face energy challenges.

Exelon has also been pushing to elect a slate of directors it is backing for NRG's board and expand the panel to 19 directors from its current 14. The election will be at NRG's annual meeting July 21.

NRG's shares closed at $22.08 on Tuesday while Exelon finished at $47.745. Neither traded premarket.