Monday, October 20, 2008

Buffett Gets Buffeted: Exelon makes $6.2 billion all-stock bid for NRG (CEG; EXC; NRG)

UPDATE: I had two near-simultaneous thoughts and only typed one in the paragraph below. It was Mr. Buffett who locked in losses for virtually all of Constellation Energy's (CEG) shareholders with his cash offer of $26.50, a price it had traded below for only a few hours in the previous five years (i.e. the day of the MidAmerican bid). Berkshire of course will have the option of riding the combined EXC/NRG, Berkshire's loss is not locked in.

Original post:
On August 15 we had "Berkshire adds NRG stake to portfolio (BRK.A)" which valued Mr. Buffett's 3.24 million share stake at $139 mm, $42.90 per share. NRG closed Friday at $19.33, up $1.15. Exelon's bid is valued at $26.43 per NRG share. If it goes through it would lock in a $53 mil. loss for Berkshire Hathaway. From MarketWatch:
Electricity generator Exelon Corp. said late Sunday that it's offered to buy rival NRG Energy Inc. in a $6.2 billion all-stock bid that it said would create the largest power company in the U.S....MORE
From the New York Times:

Nuclear Power Giant Bids for Rival

The Exelon Corporation, the Chicago-based utility, said late Sunday that it had offered to buy NRG Energy, a power generator based in Princeton, N.J., for $6.2 billion.

A combined company would produce enough electricity to serve nearly half the households in the United States, Exelon said.

Exelon, one of the nation’s largest electric companies that covers a broad swath of the Midwest and Middle Atlantic states, combines the assets of Commonwealth Edison and Philadelphia Electric. Its unsolicited, all-stock offer for NRG is a 37 percent premium over the closing price last Friday, Exelon said. Joelle Frank, a spokeswoman for NRG, said the company had advised its shareholders to “take no action, pending review by NRG’s board of directors.” NRG has hired Citigroup and Credit Suisse to advise it, she said....MORE