Exelon’s $6.2 Billion Bid for NRG Would Create Largest Power Utility in U.S.

October 21, 2008

By MATTHEW L. WALD

WASHINGTON — The Exelon Corporation’s unsolicited bid to buy NRG Energy, a power generator based in Princeton, N.J., would create the largest power company in the country, in terms of assets, market capitalization and generation capacity, and would benefit shareholders of both companies, Exelon said on Monday.

“There is simply no doubt that scale is important in turbulent times, and it’s important as the costs of growth continue to rise,” Exelon’s chairman, John W. Rowe, told analysts in a conference call, in which he cited the current credit crisis.

But the deal would raise credit challenges; Exelon is assuming that because of bond covenants, sale of NRG would require Exelon to refinance $8 billion in debt and that interest rates would run into double digits. Executives held out some hope, though, that they might be able to renegotiate with the current bondholders, rather than refinance.

The transaction would depress Exelon’s credit rating but it would remain investment grade, company executives said, and would return within two or three years to its current level.

NRG, with 44 generating stations spread across Southern California, Texas, Pennsylvania, Delaware, New York and Connecticut, had no immediate comment except to say that it was evaluating the offer with its advisers.

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