Update: NRG’s board made an official response today in regards to the offer. Not much new, but still looks like Exelon might go hostile:

Rowe (CEO of Exelon) said that Exelon “will get to a point soon where we consider it appropriate to take our offer directly to NRG shareholders rather than continue to wait for the NRG board to act.”

Looks like NRG is stalling a bit, maybe trolling for a better price.

Target: NRG Energy (NRG)

NRG last trade (11/04/2008): $24.50

Deal price: a fixed exchange ratio of 0.485 Exelon shares for each NRG common share.

Buyer: Exelon Corporation (EXC)

EXC currently (11/4/2008) trading at: $57.37 (It was $53.22 on 10/20/2008 when I first starting tracking this one).

Notes: Unsolicited, all stock offer.

From Exelon’s own press release:

Exelon has offered to acquire all of the outstanding NRG common stock in an all-stock transaction with a fixed exchange ratio with a value of $26.43 for each NRG common share…

and

Our offer represents a 37 percent premium to NRG shareholders above NRG’s closing price on October 17, 2008.

Here is what NRG had to say:

NRG stockholders are advised to take no action at this time pending the review by NRG’s Board of Directors.

Side note:

Berkshire Hathaway (Warren Buffett), bought around 3.2 million shares of NRG during the second quarter.

Crunch:

As of: 11/04/2008
Buyer: EXC $57.37
Target: NRG $24.50
Exchange rate (number of shares of EXC offered per share of NRG) 0.485
Current value (value of each NRG share at current prices) $27.82
Arbitrage spread $3.32
Arbitrage spread 13.5%

Conclusion:

Since it is an unsolicited offer, it’s not 100% friendly. If fact, Reuters reported it could go hostile. NRG has not agreed to the deal yet. The spread is arb 13%+ right now (see my number crunch above). My M&A Status: WATCH or BUY. If the arb spread stays above 8%, I will buy. If it goes back down below 5%, I will watch.

Sources:

Reuters article on latest letter from NRG to Exelon

Article about EXC going hostile on this one, if need be (Reuters)

NYT article about the deal

Exelon’s press release

NRG’s press release