Exelon Fires Another Round (EXC, NRG, RRI)

Exelon Corporation (NYSE: EXC) has filed its preliminary proxy statement for the 2009 annual meeting of NRG Energy, Inc. (NYSE: NRG). NRG still hasn’t scheduled the meeting, but Delaware law requires that the meeting be scheduled within 13 months of NRG’s last annual meeting, which was held on June 14, 2008.

Just to review: Exelon made an offer of $6.2 billion for NRG in October 2008. NRG twice rejected the offer as too low. Exelon went straight to shareholders, and received tenders for 51% of NRG shares in February. NRG offered to buy the retail business of Reliant Energy Inc. (NYSE:RRI) for $287.5 million earlier this month.

In the proxy filing, Exelon proposed a slate of candidates for the four open director seats on NRG’s board, an expansion of NRG’s board from 12 to 19 members, nominees for five of the seven new board seats, and repeal of bylaws adopted by NRG after February 26, 2009, without shareholder approval. So far, NRG has not issued any response.

Exelon is offering NRG shareholders a financially sound new owner and solid, stable cash flow. For its part, NRG management is offering shareholders a retail business in Texas that posted a negative cash flow in the fourth quarter of 2008. Which looks like a better deal?

Paul Ausick
March 18, 2009