Exelon wins approval for takeover of NRG Energy

Exelon Corp. won approval yesterday from federal energy regulators for its proposed $5.2 billion unsolicited takeover of NRG Energy Inc., furthering the company's bid to become the largest U.S. power producer.

The Federal Energy Regulatory Commission voted in favor of Exelon's petition to purchase NRG and create a company with enough generation capacity to power half the nation's households.

Two federal agencies - the Justice Department and the Nuclear Regulatory Commission - and at least five states, including Pennsylvania, still must approve the deal.

It was the first hostile takeover ever approved by the energy commission. FERC Chairman Jon Wellinghoff said agency officials did not need to see final details to determine that the deal would not harm competition in power markets and was in the public interest.

NRG, of Princeton, has consistently rejected Exelon's offer, saying it was too low. It also said in a statement yesterday that the bid was conditional because Exelon still needed to obtain financing.

"The key issue is Exelon's continued refusal to offer appropriate value to NRG stockholders," NRG said in the statement.

Exelon, of Chicago, is the parent of Peco, the Philadelphia electric and natural gas utility.

In the bid, announced in October, it has offered 0.485 of a share for each NRG share. As of Feb. 25, the latest tally made public, more than 51 percent of NRG shares were offered by NRG stockholders in support of Exelon's bid, which expires June 26.

An Exelon spokesman said yesterday the shares offered were merely an indication of support for the bid, but NRG management still would have to approve it.

"The approval of our application by FERC is a major step in the regulatory approval process," Elizabeth Moler, Exelon's executive vice president for government affairs, said in a statement.

"The combination with NRG remains on track for closing in the fourth quarter."

In addition to Pennsylvania, state regulators in California, New York, Texas, and Massachusetts must still approve the combination, as do Exelon shareholders.

NRG in March sued Exelon, warning that a successful takeover of NRG could mean higher utility rates for Peco customers. A study commissioned by NRG suggested that annual bills for Peco customers could climb as much as $66 million if Exelon bought NRG.

Exelon, with 5.4 million electricity customers in Pennsylvania and Illinois and 485,000 natural gas customers in the Philadelphia suburbs, had revenue last year of $18.9 billion.

NRG had revenue of $6.9 billion last year. It owns 48 plants that generate enough electricity to power 20 million homes.

Exelon shares yesterday fell 45 cents to $45.92 on the New York Stock Exchange. NRG dropped 74 cents to $19.15, also on the NYSE.