Canadian Manufacturing

$1.7 billion merger creates massive U.S. power company

The new company carries 47,000 megawatts (MW) of power-generation assets a combined enterprise value of $18 billion.



PRINCETON, N.J. and Houston—Rivals NRG Energy, Inc. and GenOn Energy, Inc. will merge in a $1.7-billion stock-for-stock transaction.

The deal creates the largest competitive power generator in the U.S. with about 47,000 megawatts (MW) of power-generation assets a combined enterprise value of $18 billion.

The combined company will be called NRG Energy.

“This combination ushers in a new era of scale, scope, and market and fuel diversification in the competitive power industry,” said NRG president and CEO David Crane, who will continue these roles with the combined company.

Operational efficiencies will enhance annual combined company EBITDA by $200 million by 2014 and reduce interest and liquidity costs—as well as other balance sheet efficiencies—by about $100 million per year.

The firm’s energy mix includes fossil fuel, nuclear, solar and wind capacity that generates more than 104 terawatt-hours (TWh) of electricity annually.

Company officials say balance sheets efficiencies will reduce combined indebtedness by at least $1 billion and enhancements to corporate EBITDA and funds from operations (FFO) significantly improve pro forma Corporate Debt/Corporate EBITDA by 4.1x and Corporate FFO/Corporate Debt by 16.4%

NRG shareholders will own 71 per cent of the combined company and GenOn shareholders will own 29 per cent.

After closing, the Board of Directors will have 16 members with 12 members from the NRG Board and four joining from the GenOn Board. Howard Cosgrove will remain Chairman of the NRG Board and GenOn Chairman and CEO Edward R. Muller will join the NRG Board as vice-chairman.

The combined company will be dual headquartered, with financial and commercial headquarters in Princeton, N.J. and operational headquarters in Houston.

NRG is a wholesale power generation and retail electricity company with market capitalization of $4.45 billion.

GenOn has a generation portfolio of approximately 22,700 megawatts, of power generation facilities, including baseload, intermediate and peaking units using coal, natural gas and oil to generate electricity.

Related Posts from the network