Electric power utility company Exelon Corporation (EXC) on Thursday sweetened its bid for rival NRG Energy Inc. (NRG) to $8 billion.
The all-stock offer represents a 12% premium on Exelon's previous offer for NRG back in October, which the company rejected as undervaluing its business. That offer was for about $7 billion in stock.
Exelon said that the new bid is its "best and final offer" for Princeton, New Jersey-based NRG. If NRG accepts the offer, the new combined company would be the #1 power producer in the U.S., providing electricity to about 45 million homes.
Exelon's offer is an exchange of 0.545 shares of its stock for each NRG share, while the previous offer was for 0.485 shares. The company said it raised its bid because it discovered an additional $1.5 billion in potential savings from the merger, as well as NRG's acquisition of Reliant Energy's retail business back in May.
Both companies' directors will meet at NRG's annual meeting on July 21, and the decision on whether or not to accept the takeover is expected to be made then.
Ecelon shares fell $1.13, or -2.3%, in morning trading Thursday.
The Bottom Line
We had removed shares of EXC from our ''Recommended'' list on Aug.1, when the stock traded at $78.62. The company has a 4.07% dividend yield, based on last night’s closing stock price of $51.56. The stock has technical support in the $40-45 price area. If the shares can firm up, we see overhead resistance around the $55-57 price levels. We would remain on the sidelines for now.
Exelon Corporation (EXC) is not recommended at this time, holding a Dividend.com DARS Rating of 3.2 out of 5 stars.
Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.
Tom Reese/Paul Rubillo, Dividend.com
