Power company Mirant sues NRG over takeover rejection

<p>Power company Mirant Corp. on Wednesday sued rival energy producer NRG Energy Inc., claiming that NRG is unfairly rejecting its nearly $8 billion takeover bid.</p><p>Atlanta-based Mirant sought a court order in Delaware directing NRG not to obstruct its attempts to acquire NRG. Mirant asserted that NRG is using a "transaction ploy" to turn aside the offer by claiming that Mirant is using confidential information from NRG's former financial adviser.</p><p>Mirant said it has not received any confidential information.</p><p>Princeton-based NRG called the lawsuit "a desperate attempt to compensate for the fact that Mirant's proposal significantly undervalues NRG."</p><p>The suit, filed in the Chancery Court of Delaware, came a day after the takeover bid became public when NRG announced it was rejecting the offer, saying it was not in the best interests of its shareholders.</p><p>The lawsuit does not name the financial adviser. However, in a May 23 letter that NRG released Tuesday, NRG executives refer to the Wall Street firm Goldman Sachs, which was involved with efforts to extract Mirant from bankruptcy.</p><p>The letter, to Mirant Chairman and CEO Edward R. Muller and Mirant's board, said discussions of combining the companies date to November.</p><p>Mirant said it has received a financing commitment of about $11.5 billion and proposes to buy NRG at about $57.16 a share, a premium of about 33 percent to NRG's share price Tuesday of $43.01.</p><p>NRG shares climbed $6.73, or 15.7 percent, to close at $49.74 in trading Wednesday on the New York Stock Exchange after rising to a 52-week high of $51.38 earlier in the session. Mirant shares fell 37 cents, or 1.5 percent, to $24.88.</p><p>Separately on Wednesday, Mirant said it had agreed to settle legal disputes over a distribution contract with Potomac Electric and Power Co. Under the proposed settlement, Mirant would pay Potomac $520 million in cash and stock.</p><p>The settlement would resolve a number of disputes, including a long-term arrangement requiring Mirant to buy electric power from Pepco through 2021. The specifics of that deal would become void under the proposed settlement.</p><p>Mirant produces and sells electricity in the United States, the Caribbean and the Philippines. The company owns or leases more than 17,000 megawatts of electric generating capacity globally, but was weighed down by debt of $5 billion.</p><p>NRG, which recently acquired Texas Genco LLC, generates more than 24,700 megawatts, mostly in Texas and the Northeast, South Central and Western regions of the United States. It also has ownership interests in generating facilities in Australia and Germany.</p><p>The combined company would have over 43,000 megawatts globally, with over 37,500 megawatts in the United States, according to Mirant.</p><p>That would make it among the largest U.S. power producers. The pending acquisition of Newark-based Public Service Enterprise Group Inc. by Chicago-based Exelon Corp. would give that entity a nation-leading capacity of 45,400 megawatts after some 6,600 megawatts were divested.</p><p>A megawatt is enough power to serve between 700 and 1,000 homes for a year.</p><p>Mirant emerged in January from Chapter 11 bankruptcy _ the 11th largest in U.S. history at the time of the filing in July 2003. Mirant reduced its work force and shaved billions in debt from its balance sheet as part of its return to the public markets.</p><p>Mirant said a deal would save the combined companies about $150 million per year because it would cut overlapping functions.</p><p>NRG said it rejected Mirant's approach because the offer undervalues the company, Mirant's stock has been thinly traded for only four months and is a suspect currency and because NRG directors do not believe current market conditions warrant a sale.</p><p>___</p><p>On the Net:</p><p>HASH(0x1d060c8)</p><p>HASH(0x1d0614c)</p>

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