Exelon Corp., the largest U.S. operator of nuclear power plants, will need to raise its $6 billion bid for NRG Energy Inc. as proposed legislation to reduce greenhouse-gas emissions increases the value of NRG's assets, analysts at Macquarie Capital USA Inc. said.
NRG would benefit under a cap-and-trade measure passed last week by a U.S. House committee, under which billions of emissions permits would be distributed to utilities, manufacturers and refiners, Macquarie analysts Angie Storozynski and Andrew Weisel wrote in a report today. The Princeton, New Jersey-based company also became more valuable after the Energy Department included its nuclear investment proposal among the candidates for loan guarantees, they said.
"Exelon needs to substantially up its merger offer for NRG to close the deal," the analysts said. "NRG stands to benefit from a less-stringent carbon policy."
Exelon's offer of 0.485 share for each NRG share to create the largest U.S. power producer has been repeatedly rejected by NRG as too low. The bid values NRG at $22.62 share, based on Exelon's closing price on May 22. NRG rose $1.34, or 7 percent, to $20.36 at 1:37 p.m. in New York Stock Exchange composite trading. Exelon gained $1.08, or 2.3 percent, to $47.72.
"We continue to believe our offer is full and fair," Jeffrey Smith, a spokesman for Chicago-based Exelon, said today in a telephone interview. "Our stated intention is to fully evaluate the potential value for shareholders as part of a due diligence process with NRG."
NRG doesn't comment on analysts reports, said Lori Neuman, a spokeswoman for the company.