NRG Energy

Here's some new information on the proxy contest over NRG Energy, which I discussed briefly a couple of weeks ago.

Although the suitor, Exelon, was passed over in the US government's recent allocation of loan guarantees ($18.5 billion worth of them) for the next generation of U.S. nuke power plants, NRG is on the list of those receiving said guarantees, which is one good reason why it is a pearl worth sea-diving to acquire.

Exelon's first bid, last fall, valued NRG at $6.2 billion. It has since sweetened that (as of last week) to $7.7 billion, which it says is its final offer.

NRG says simply what it has to say in such a situation. It is aware of the new sweetened offer, and "NRG shareholders are advised to take no action at this time pending the review by NRG's Board of Directors."

What's this "next generation" stuff,. though? Isn't that the series with Captain Picard?

No, as I understand it, there have been three "generations" of reactor so far. There were the prototypes of the 1950s and early 1960s, a time of great "Atoms for Peace" enthusiasm.

The Gen 2 reactors were the early commercial plants, the sort all the shouting was about back in the days of a Jane Fonda movie and the Three Mile Island scare. They were designed for 40 years of operation, extendable to 80.

The Gen 3 reactors so far constructed at in Japan -- others have been approved for construction in europe, though no shovels have been filled with dirt there yet. They are designed for 60 years of operation, extendable to twice that.

A move to Gen 4 in the US would of course involve leapfrogging Gen 3 entirely. That seems to be the goal. And as I've said, NRG is on board. Exelon wants to get onto that team by buying NRG.

NRG Energy

NRG Energy is holding its annual shareholders meeting a month from now -- July 21.

Four directors' seats are at issue. What is more, the continued independent existence of the company is at issue: Exelon has a buy-out offer on the table.

A Houston based energy research firm, Tudor Pickering Holt, has supported the NRG management's desire to retain its independence, or at least to hold out for a higher price. Tudor agrees with them that the offer undervalues the target.

Chris Morrison, of BNET Energy, reminds us all that "the world is full of procrastinators," and that the reason Exelon's offer has not yet found more takers than it has may simply because that there is a good deal of time left in which they may do so. "There are good reasons to wait until an offer is about to expire before taking it up."

NRG has been quite busy in recent weeks, since this offer has been on the table, entering into partnerships, making deals, and generally showing the investors what they can do.