NRG rejects Exelon's $6.1B buyout offer

Princeton, N.J.-based NRG Energy also said it rejected the proposal because Exelon has yet to line up the financing for the deal.

Chicago-based Exelon made the offer last month. It has said the combined Exelon and NRG would have been big enough to power nearly 45 million homes with 47,000 megawatts. It would have had a diverse power mix and a market capitalization of $40 billion.

"We could not be more certain in our belief that your proposal is opportunistic, serving only as a means for Exelon to extract a severely disproportionate percentage of the current and future value of NRG and its assets from its rightful owners, NRG's shareholders, and transfer it to Exelon and its shareholders," NRG President and Chief Executive David Crane and board Chairman Howard Cosgrove wrote in a letter to Exelon Chairman and Chief Executive John Rowe.

NRG said its shareholders would have ended up owning 17 percent of the combined company while contributing 30 percent of the merged company's free cash flow in 2008.

NRG accused Rowe of coming up with a "lowball exchange ratio" after Rowe met with company officials in September. NRG said it believes in industry consolidation and "always will be a willing seller or buy when genuine value can be created for both parties."

NRG also said its shareholders would have taken on additional financial risk with the deal, noting that NRG third-quarter results exceeded estimates while Exelon's results came in below expectations and that NRG's growth would be dragged down by Exelon's debt.

Crane said in an interview Sunday that Exelon is trying to take advantage of NRG while its share price is down so much because of the market turbulence. He said the company was surprised that Exelon made the offer without lining up financing in advance.

NRG remains open to discussing a deal. "It just has to have value for both sides," he said.

Exelon said Sunday night that it is reviewing the letter.