The interactions between Mirant Corporation and NRG Energy are developing into quite an interesting takeover battle. Yesterday Mirant made an unsolicited bid to buy NRG for $7.8 billion, in an offer that is a combination of cash and stock. The combination of the two companies together would create the largest independent company in the country.

The bid reflects the third time Mirant has sought to acquire NRG. Just a week ago NRG rejected an offer by Mirant. NRG also rejected an acquisition offer by Mirant in March.

At first glance, it appears that NRG has rejected this latest bid based on financial concerns. Mirant filed bankruptcy in 2003, but apparently has rebounded. Mirant not only claims to have secured $11.5 million in financing from J.P. Morgan, but that the deal with NRG would create significant cost savings. However, although Mirant’s offer appears to represent a 33 percent premium over NRG’s current share price, NRG’s board has stated that it believes Mirant’s stock is overvalued and that the company is too risky.

Despites these rationales, NRG also appears to simply not be interested in any current takeover efforts. Thus, in a letter to Mirant, the NRG board stated: "[The offer] significantly undervalues NRG; our concerns about Mirant's value and your stock's relative lack of liquidity and trading history makes Mirant's stock an unacceptable currency; and, finally, having taken into account trends and developments in the wholesale power generation sector, we do not believe this is the appropriate time to engage in a sale process.”

Is this a new twist on "just say no"?

| Bookmark

TrackBack URL for this entry:
https://www.typepad.com/services/trackback/6a00d8345157d569e200d8352d6d4353ef

Links to weblogs that reference Third Time the Charm in Mirant Bid for NRG?: