NRG shareholders nix acquisition by Exelon
Although an acquisition of NRG Energy Inc., owner of the Indian River Generating Station near Millsboro, has been reported in recent months as a possibility, Exelon Corporation will not be acquiring the company after all.
On July 21, NRG Energy reported in a press release that, based on a preliminary vote count at the company’s annual shareholders’ meeting, shareholders had voted to re-elect four incumbent company directors to the board and rejected Exelon’s proposal, which would have included replacing those directors with four new directors and five additional director nominees.
Exelon said that, in light of the proxy vote results, they would be terminating their offer to acquire outstanding shares of NRG at a fixed exchange ratio of .545 of a share of Exelon common stock for each share of NRG common stock.
“The NRG shareholders have spoken, and Exelon will move on,” said John Rowe, chairman and chief executive officer of Exelon.
In what has been referred to as a “hostile takeover bid,” Exelon had made an unsolicited offer to NRG’s management and board that NRG officials did not feel was sufficient, so Exelon Corporation went directly to the shareholders.
In a letter to shareholders in April, NRG officials wrote: “Exelon’s preliminary proxy filing proposes to expand NRG’s Board of Directors from its current 13 to 19 directors and nominates a slate of nine Exelon directors — four of whom will contest the four Board positions up for election and the other five who Exelon expects to fill the new directorships.”
“Their shareholders, in deciding to keep their same incumbent directors, felt the current board made the right decision,” explained Judy Rader of Exelon.
In response to Exelon Corporation’s application under Section 203 of the Power Act, the State of Delaware’s Public Service Commission and Department of Natural Resources and Environmental Control issued joint comments on the potential acquisition in January of this year, saying Exelon had not met its burden and that a proposed merger was “not in the public interest.”
In a letter to Federal Energy Regulatory Commission Secretary Kimberly D. Rose, state officials wrote that they were “respectively request[ing] that, if the FERC approves the transaction, in which Exelon would have acquired voting securities of NRG Energy Inc., acquired control over NRG Energy Inc., and certain NRG subsidiaries, and subsequently restructured and consolidated Exelon and NRG, that the FERC clarify that it is not approving the divestiture of the facilities and that Exelon will be bound to the consent order as detailed above.”
The consent order they referred to is one between the State of Delaware and NRG Energy Inc. “to make certain upgrades to its facility, including the shutdown of two units and installation of various environmental upgrades to existing units.”
The comments from the Public Service Commission and DNREC go on to say that, as it specifically pertains to the Indian River power plant, “the potential sale of this facility to an unknown entity with unknown financial and technical capacity could prove disruptive to the process and the court-mandated deadlines. Failure to comply timely could cause harm to human health and the environment.”
The “divestiture of the facilities” mentioned in that letter refers to Dover Energy, the Vienna Generating Station and the Indian River Generating Station near Millsboro.
“NRG stockholders understood this vote was about value, and they voted overwhelmingly to send a message that Exelon’s current offer was unfair to NRG stockholders,” said David Crane, president and chief executive officer for NRG. “We want to thank our stockholders today.”