In a letter to Exelon CEO John Rowe, Princeton-based NRG said it found the new bid was not in its shareholders' best interest but said it represented a "step in the right direction."
NRG said it is still open to any proposal that properly accounts for its "fundamental value and extraordinary growth prospects." Exelon, Chicago, previously said that its most recent bid was its "best and final offer."
If NRG does manage to work out a deal with Chicago-based Exelon, the new company would be the largest U.S. power generator, providing energy to about 45 million homes. A potential acquisition would also give Exelon gas generation and coal plants - assets that would be valuable even under pending emissions caps - and expand its presence in Texas, California and the Northeast.
Exelon raised its bid to 0.545 of a share for each NRG share, up from 0.485 of a share.
While NRG has rejected Exelon's most recent proposal, the door is still open for a possible acquisition. Both Exelon and NRG Energy have nominated a slate of directors for shareholders to vote on at NRG's annual meeting on July 21. The outcome of that vote could ultimately determine if a sale goes through.
Exelon is recommending NRG shareholders vote to expand the board and for nine new independent directors.
Last week Exelon said it was "confident" it could meet all financing needs associated with the transaction, including refinancing of $4.7 billion of NRG's senior notes and other NRG debt, while maintaining its investment-grade credit ratings.
Exelon has almost $19 billion in annual revenue and 5.4 million electric customers in northern Illinois and Pennsylvania. It also has 480,000 natural gas customers in the Philadelphia area.
Its 10 nuclear stations, with 17 reactors, represent about 20 percent of the U.S. nuclear industry's power capacity, and about 3 percent of all U.S. power generation.
NRG's power plants have 24,000 megawatts of generation capacity, enough to supply more than 20 million homes. The Princeton, N.J.-based company's retail business, Reliant Energy, serves more than 1.7 million residential, business, commercial and industrial customers in Texas.
Due to the Reliant Energy acquisition, NRG boosted its full-year cash flow from operations outlook and its adjusted earnings before interest, taxes, depreciation and amortization forecast. Its adjusted EBITDA guidance is now $2.5 billion, a $325 million increase from its prior outlook. The target for cash flow from operations was raised $200 million to about $1.68 billion.
In addition, NRG's board raised its existing $330 million repurchase program to $500 million. It plans to complete the buybacks by year-end.
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