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Independent power producer NRG Energy rejected Exelon's sweetened hostile bid Wednesday, saying the $6.9 billion offer was still too low.
NRG [NRG Loading... ()] said in a letter to Exelon Chief Executive John Rowe that its board "determined that the revised offer is not in the best interest of NRG stockholders in that it continues to substantially undervalue NRG."
NRG also boosted its 2009 forecast for earnings before interest, taxes, depreciation and amortization due to its recent acquisition of Reliant Energy's Texas retail power business.
Exelon [EXC Loading... ()] raised its all-stock offer for NRG more than 12 percent last week, but investors have not been swayed by the increased price.
NRG shares have lost more than 15 percent of their value since Exelon bumped up its bid.
Exelon, which has nominated a slate of directors to stand for election at NRG's July 21 annual meeting, has said its increased bid of 0.545 of its shares for every NRG share is its best and final offer.
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Nick Simonite / AP NRG power plant |
Still, NRG called the revised Exelon bid a step in the right direction.
"If you would properly recognize the value created by NRG itself, you would be able to increase your current 0.545 offer by a substantial amount," NRG wrote in its letter.
NRG argued that Exelon was underestimating the value created by its recent acquisition of the Texas retail business, which it says is worth more than four times as much as Exelon believes.
The independent power producer raised its full-year forecast for adjusted EBITDA by $325 million to $2.5 billion, primarily due to the Reliant acquisition, which it says will generate $400 million of EBITDA in 2009.
It also boosted its 2009 estimate for cash flow from operations by $200 million to $1.675 billion, and increased the authorization for its share buyback plan to $500 million from $330 million.
NRG said the Exelon bid also ignores value created by its nuclear program, its development program for low-carbon power generation and its own cost reduction program.
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