Exelon ends bid to take over NRG
NRG shareholders vote 'no' to Exelon board expansion
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WHAT'S NEXT?
NRG Energy proposes to build two new reactors in Bay City. The city is home to the South Texas Project, an operational nuclear power plant. NRG is one of four likely recipients of $18.5 billion in federal loan ...
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WHAT'S NEXT?
NRG Energy proposes to build two new reactors in Bay City. The city is home to the South Texas Project, an operational nuclear power plant. NRG is one of four likely recipients of $18.5 billion in federal loan guarantees, the Energy Department announced in May.
Dale Fowler, president of the Victoria County Economic Development Corp., said a two-reactor expansion would serve as an economic boom to the region with trickle-down effects in Victoria.
Exelon Nuclear ended its bid on Tuesday for NRG Energy, but the move won't accelerate its decision whether to build a Victoria County plant, company spokespeople said.
The company withdrew its $7.4 billion offer shortly after NRG shareholders voted against expanding the board of directors to include members hand-picked by Exelon. Exelon hoped a friendlier, expanded board of directors would give it the support needed to finalize a deal.
Exelon began hostile takeover efforts late last year after NRG rejected initial merger offers. Exelon increased its bid in recent weeks but to no avail.
With an NRG takeover out of the picture, local nuclear supporters expressed subdued optimism.
"I'm glad that it will help Exelon focus on Victoria County," said Dale Fowler, president of the Victoria County Economic Development Corp. "But with respect to our project, I know the decision to end its takeover bid won't impact the national economy and federal loan guarantees, and that's what we need to get the project back on track, in my opinion."
Exelon planned to decide in early 2010 whether it would build a Victoria County nuclear power plant. A recession and less-than-ample federal loan guarantees delayed the decision, company spokespeople said.
Instead of applying for a construction and operating license, the company applied for an early site permit, delaying the decision whether to build for up to three years.
"The Victoria project will continue or not based on economic and market conditions that have nothing to do with NRG," Judith Rader, an Exelon spokeswoman, said Tuesday. "The NRG shareholders vote does not have an impact on our Victoria timeline."
John Rowe, Exelon's chairman and chief executive officer, said the company will redouble its focus on expanding nuclear output at existing plants.
"The NRG shareholders have spoken, and Exelon will move on," Rowe said in an e-mail.
Rowe said Exelon could have finalized the takeover, but the company was unwilling to sweeten the deal. NRG executives said Exelon's best bid still undervalued their company.
"NRG stockholders understood that this vote was all about value and they voted overwhelmingly to send a message that Exelon's current offer was unfair," said David Crane, NRG's president and chief executive officer.
NRG did not release its preliminary vote count. The company said final results will be released in August.
Crane said the company will continue to evaluate offers.
John Figer is with Texans for a Sound Energy Policy Alliance. He opposes a Victoria County power plant because of what he calls water-availability concerns. He said Exelon's failed takeover bid points to a pattern of hasty decisions.
He pointed to:
Exelon's primary site reversal from Matagorda County to Victoria County.
The switch in planned reactor design.
The switch from filing a construction and operating license to filing an early site permit.
"In Exelon's eagerness to compete in the Texas market and to build their first nuclear power plant, they continue to reverse decisions that don't pan out as they've planned," Figer said.
Exelon spokespeople, meanwhile, have said events out of their control - such as a national recession - triggered changes to their plans.
