Exelon takes NRG bid to shareholders; Invitrogen, Applied Biosystems merger set to close Nov. 21

By Cristal Cody

New York, Nov. 11 - New merger deals stayed fairly quiet for most of Veterans Day ahead of Wednesday's Anheuser-Busch Cos. shareholder vote on the InBev merger, but one company decided the holiday was perfect for court action and a takeover bid.

Exelon Corp. said after the market closed that it will take its $6.1 billion takeover offer for NRG Energy Inc. straight to shareholders on Wednesday. Exelon also filed a lawsuit Tuesday in the Delaware Chancery Court against NRG and its directors alleging a breach of fiduciary duty by not taking appropriate action on the Oct. 19 offer.

Also on Tuesday, the European Commission cleared the last regulatory hurdle for the merger of Invitrogen Corp. and Applied Biosystems Inc.

In other news, Polaris Acquisition Corp. nearly cut its offer for Hughes Telematics Inc. in half to $385 million.

Meanwhile, the Dow Jones Industrial Average fell 176.58, or 1.99%, to 8,693.96, down nearly 35% since the beginning of the year.

The Standard & Poor's 500 fell 20.26, or 2.20%, to 898.95, while the Nasdaq composite index fell 35.84, or 2.22%, to 1,580.90.

Fight picks up

Exelon took in NRG's rejection on Sunday and additional comments on Monday and then took off the gloves on Tuesday.

Exelon said it will offer the same bid of 0.485 of an Exelon share for each NRG share.

"Based on the positive investor response to our proposal, we expect our exchange offer will garner strong support from NRG shareholders, who will not only receive a significant premium for their shares but will also participate in the future growth of the nation's largest and most diversified power company as new shareholders of a combined Exelon and NRG," John W. Rowe, Exelon's chairman and chief executive officer, said in a statement.

NRG representatives did not immediately return phone calls for response to the takeover attempt.

Rowe said in a letter sent Tuesday to NRG directors that a merger would "create substantially more value for both companies' shareholders than either company can realize alone."

The acquisition would make Chicago-based Exelon the nation's biggest power producer.

"Additionally, the combined company offers greater potential for stock appreciation at a faster pace than NRG could achieve on a stand-alone basis," Rowe said.

The merger could be structured to not trigger the change-of-control provisions for NRG's senior notes, which would reduce refinancing requirements to $4 billion or less, Rowe said.

NRG shares rose 2.17% to close at $23.05 on Tuesday.

David Crane, chief executive officer of Princeton, N.J.-based NRG, defended the company's rebuff of Exelon on Monday in a conference call with analysts and said the deal includes extra debt servicing costs of up to $300 million a year and synergy problems.

Exelon's stock rose 3.96% to close at $52.49 a share on Tuesday.

Invitrogen, Applied Biosystems hurdle cleared

Invitrogen and Applied Biosystems said Tuesday they have received clearance from the European Commission and the companies expect the mixed stock and cash deal to close Nov. 21.

The companies will take the name Life Technologies Corp. after the deal closes, and the stock will trade on the Nasdaq market under the ticker "LIFE."

When Invitrogen agreed to buy Applied Biosystems in June, the offer was for $6.4 billion in cash and stock.

"It's closer to $4 billion now," said Alastair Mackay, an analyst with Garp Research & Securities. "They were pretty confident last week this was going to work. It doesn't look like there's any other wrenches in the procedure."

Invitrogen shares fell 2.35% Tuesday to close at $26.57, down from the $45.00 area at which the shares were trading when the offer was made.

Applied Biosystems shares closed down 0.83% at $29.95, off from the $34.00 area at which the shares traded in June.

Polaris takes chunk out of Hughes bid

Polaris Acquisition said Tuesday that it lowered its all-stock offer for Hughes Telematics to $385 million.

Polaris had agreed in June to buy Hughes, which is controlled by private equity firm Apollo Management, for $700 million.

"Nothing has eroded our confidence in this merger," Marc Byron, chairman and chief executive officer of Polaris, said during an investors conference call to discuss the transaction. "The market is not the same as it was in June, so we thought it would be prudent to modify the terms of the transaction."

Under the new terms, Hughes shareholders will receive 15 million shares of Polaris common stock at closing instead of the 45 million shares originally offered. The remaining 30 million shares will be offered if the company reaches certain levels in its stock price over the next five years.

Hughes shareholders are expected to own 39% of the fully diluted equity of the combined company, according to Polaris.

Hughes makes navigation and internet access electronics for vehicles and has contracts with Chrysler Group and Mercedes-Benz US.

Polaris is aware of the economic woes and sector problems, Byron said in the conference call.

"Please do no think we have our heads in the sand about the current state of the auto industry," he said.

Polaris shares rose 1.7% to close at $8.95.

Mentioned in this article:

Anheuser-Busch Cos. Inc. NYSE: BUD

Applied Biosystems Inc. NYSE: ABI

Exelon Corp. NYSE: EXC

Invitrogen Corp. Nasdaq: IVGN

NRG Energy Inc. NYSE: NRG

Polaris Acquisition Corp. AMEX: TKP

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