No Indication of NRG Energy Enthusiasm for Exelon's Offer

With respect to Exelon's (EXC) recent campaign aimed at obtaining NRG Energy (NRG) support, there does not appear to be any indication that NRG and/or Warren Buffett have much enthusiasm for the current $26.43 offer. In other words, it is not expected that EXC's efforts will have much of an impact in convincing NRG to accept the offer at this time, with or without the threat of a hostile takeover attempt. Threatening an individual such as Warren Buffett is somewhat comical and in the end will proved to be an act of futility.

Added to this is the fact that any NRG/EXC combination, hostile or otherwise, will take in upwards of 12 months to complete due to the various regulatory obstacles. There truly is no logic in going hostile in a situation where extremely lengthy regulatory processes can easily create variables which would allow NRG to avoid this deal. As an example, if the overall market conditions improve over the next several months, NRG could simply become an acquiror again, as it was so recently in the CPN scenario.

Thus, any hostile attempt here is certainly not in the best interest of EXC and will more than likely have the opposite affect desired.

Although NRG has not provided any indication of when it will respond to EXC, the company remains expected to decline the offer as inadequate. EXC will probably need to improve the offer closer to the $30 range in order to bring NRG into serious negotiations.