Exelon Corp raised its hostile takeover bid for independent power producer NRG Energy Inc by more than 12 percent to $7.45 billion on Thursday to sway investors ahead of NRG's annual meeting.
But the new offer failed to trigger investor excitement, and NRG shares fell nearly 4 percent in premarket trade.
The new offer comes more than eight months after Exelon first announced its intention to buy NRG and create the nation's biggest electricity generator with the largest fleet of nuclear power plants.
This is our best and final offer, and we will use the time leading up to the NRG annual meeting on July 21 to communicate the value of our new offer to NRG shareholders, Exelon Chief Executive John Rowe said in a statement.
Exelon is offering 0.545 Exelon share -- currently worth about $28.10 -- for each NRG share. That amounts to a premium of nearly 8 percent above NRG's closing share price of $26.05 on Wednesday.
At Wednesday's close, Exelon's previous bid valued NRG shares at $25.01.
NRG, which has said Exelon's previous offer was too low, did not immediately comment on the sweetened bid. One analyst was not convinced Exelon's higher offer would get the deal done.
May be a case of too little, too late ... we don't think the small premium gets the deal to the finish line, Tudor Pickering Holt & Co analyst Rebecca Followill said in a note to investors.
Exelon said $1.5 billion of newly identified cost savings as well as value created by NRG's recent acquisition of Reliant Energy's retail business justified the raised bid.
Exelon made its previous bid last October, when the global economy was in shambles. That bid, which offered 0.485 Exelon share for each NRG share, came under fire from analysts and investors as NRG's stock price rose above the Exelon offer.
A combined Exelon and NRG would own about 48,000 megawatts of power generating capacity, enough to supply electricity to nearly 40 million homes, and put the company in a strong position to adapt to proposed legislation capping carbon dioxide emissions, Exelon said.
That legislation -- approved by the U.S. House of Representatives and pending in the U.S. Senate -- would establish the first U.S. regulations on emissions of the gas that is blamed for contributing to global warming.
The value of the revised Exelon bid -- $7.45 billion -- is based on Exelon's closing price on Wednesday of $51.56 a share and about 265 million NRG shares outstanding.
Exelon said it is confident, based on discussions with its outside advisers, that it will be able to meet all financing needs associated with the deal, including the refinancing of $4.7 billion of NRG's senior notes and other debt.
Exelon said if it was successful in closing the deal, it would sell $1.6 billion in assets, issue $1.1 billion in mandatory convertibles or common equity, and finance about $4.2 billion of the cost.
Exelon has nominated a slate of directors to stand for election at NRG's annual meeting.
NRG shares were down 3.8 percent, or 99 cents, to $25.06 in premarket trading, while Exelon shares were little changed.
(Additional reporting by Hezron Selvi in Bangalore; Editing by Derek Caney and John Wallace)