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NRG and GenOn to Merge to create largest competitive power generation company in the US; 47,000 MW net combined capacity

NRG Energy, Inc. and GenOn Energy, Inc. signed a definitive agreement to combine the two companies in a stock-for-stock tax-free transaction. The combined company, which will retain the name NRG Energy, will become the largest competitive power generation company in America with approximately 47,000 MW of fossil fuel, nuclear, solar and wind capacity across the merit order, situated almost entirely in the three premier competitive energy markets in the US.

The combined fleet generates more than 104 terawatt-hours (TWh) of electricity annually. The combined enterprise value will be $18 billion.

The companies say that the transaction will enhance annual combined company EBITDA by $200 million by 2014 by realizing cost and operational efficiency synergies. In addition, the transaction will enable the combined company to reduce its interest and liquidity costs, and realize other balance sheet efficiencies, in aggregate, of $100 million per year. As a result, total recurring FCF (free cash flow) benefits generated by this transaction will be approximately $300 million per year.

The combined company will continue the work of NRG and GenOn in reducing emissions from their existing conventional fleets. NRG and GenOn combined have invested more than $3 billion since 2000 to reduce emissions. This investment has helped NRG reduce SO2 emissions by 56% and NOx emissions by 64% below 2000 levels and GenOn reduce SO2 emissions by 90% and NOx emissions by 78% below 1990 levels, the companies said.

In addition, the combined company will continue to grow NRG’s portfolio of solar generating facilities, its eVgo electric vehicle charging network and its other clean energy products and services. In addition, all previously announced plant retirements and deactivations will be completed on schedule.

GenOn shareholders will receive 0.1216 of a share of NRG common stock in exchange for each GenOn share of common stock. Based on NRG’s and GenOn’s closing share prices on July 20, the transaction represents a 20.6% premium to GenOn’s shareholders. Following completion of the transaction, NRG shareholders will own 71% of the combined company and GenOn shareholders will own 29%.


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