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Exelon-NRG Saga Could End Tuesday

If NRG Energy Inc. shareholders don't elect the nine new directors proposed by Exelon Corp. at their annual meeting Tuesday, the company will abandon its attempt to acquire NRG, Exelon said last week.

According to Exelon, what could happen after the NRG annual meeting:

"With NRG's annual meeting taking place...Tuesday, we are only a few days away from a defining moment for NRG and its stockholders," wrote Rowe. "It has now been almost nine months since Exelon publicly announced its proposed acquisition of NRG [see NGI, Nov. 17, 2008]...Your votes will determine whether or not we proceed with a transaction."

NRG has claimed to have the support of four proxy advisory firms in its rejection of a Exelon's revised offer and opposition to the Exelon board nominees.

RiskMetrics Group (formerly Institutional Shareholder Services), PROXY Governance Inc. (PGI), Glass Lewis & Co. and Egan-Jones Proxy Services all have recommended that their clients vote for the election of NRG's slate of independent director nominees at the company's annual meeting. All of the proxy advisory firms also recommended that NRG stockholders vote against Exelon's proposal to expand the NRG board, which is seen as a move to advance the merger sought by Exelon.

According to NRG, PGI believes the company has been receptive to talks with Exelon and has given its offer fair consideration. "In September 2008, before the public tender offer and the proxy contest, NRG voluntarily met with Exelon to begin exploring strategic options. By its own account, NRG expected to continue those discussions at industry events in November, in the hope financial markets would have begun to calm by then. The clear implication is that, far from being entrenched, the company's management and board are open to strategic discussions which might maximize shareholder value -- and that the issue remains what it was last September, the question of whether Exelon will pay full value for the company's existing operations and future potential," PGI said as quoted by NRG.

Egan-Jones said election of the Exelon director nominees "would not contribute meaningfully to the quality of the company's board of directors," according to NRG. Glass Lewis said election of the Exelon nominees "could give Exelon an unnecessary advantage in a strategic transaction involving NRG." RiskMetrics said NRG shareholder support of Exelon's nominees may serve "to embolden Exelon and to undercut NRG's negotiating leverage, with the net result a failure to maximize value..." according to NRG.

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