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Courting Season Continues for NRG Shareholders

June 29, 2009
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Any NRG Energy Inc. shareholders who might be reaching for the "white proxy card" at the behest of their company's management were urged last Thursday by NRG's unwelcome suitor, Exelon Corp., to go for the "blue" card instead.

That message followed by one day a missive from NRG, urging shareholders not to be wooed by any sweetened offer for their company that might come from Exelon following a meeting of its board Tuesday. "We urge you to use the WHITE proxy card to continue to send the message to Exelon that its proposal was and is inadequate, and the merit of any proposal made by Exelon is best and most impartially assessed by NRG's highly experienced board of directors as presently constituted..." NRG management said.

And so continued the proxy battle in the months-long quest by Exelon to acquire NRG against its will.

Exelon CEO John Rowe in a letter urged NRG shareholders to vote in favor of proposals to expand the NRG board and elect nine new, independent directors, who, it can be presumed, would support the takeover of NRG by Exelon. Rowe noted what he said are strengths of an Exelon-NRG pairing:

Exelon announced on Oct. 19, 2008 its proposal to acquire all outstanding common shares of NRG at a fixed ratio of 0.485 of a share of Exelon for each share of NRG, which represented a 37% premium based on NRG's closing price on Oct. 17, 2008 (see NGI, Nov. 17, 2008). After NRG twice rejected the Exelon offer, Exelon appealed to NRG shareholders on Nov. 12, 2008.

Further making its case for independence last Wednesday, NRG management touted the vitality of the competitive power market in Texas, where the company is active.

"When the current economic recession begins to subside in Texas, which has historically rebounded faster and more strongly than Exelon's areas of concentration in the Midwest and PJM [Interconnection], we expect NRG stockholders will realize greater benefit from the company's strong position there than they would if their Texas position was severely diluted -- a natural consequence of the Exelon proposal."

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