Electric power generators NRG Energy Inc. (NYSE: NRG) and GenOn Energy Inc. (NYSE: GEN) have agreed to merge in an all-stock transaction valued at $1.7 billion. Under the terms of the deal, GenOn shareholders receive 0.1216 shares of NRG common stock in exchange for each share of GenOn stock. Based on Friday’s closing price, the transaction reflects a premium of 20.6% for GenOn Stock. NRG shareholders will own 71% of the combined company, which will retain the NRG name. The agreement was announced Sunday morning.
The combined company will have an enterprise value of $18 billion, according to the press release announcing the deal, and will be the largest merchant power generator in the US with 47,000 megawatts of capacity.
NRG noted that second quarter adjusted EBITDA will be about $530 million in the second quarter for that company alone, and that full-year EBITDA will be $1.825-$2 billion with free cash flow of $800 million to $1 billion.
The company also offered pro forma guidance for 2013 and 2014. Adjusted EBITDA for 2013 is estimated at $2.535-$2.735 billion and in 2014 at $2.63-$2.83 billion.
Also on Sunday morning, NRG announced that it pay a $0.09/share quarterly dividend on August 15th to shareholders of record as of August 1st. This is the company’s first ever dividend.
Shares of GenOn are up 25.3% at $2.28 in a 52-week range of $1.24-$4.10. Shares of NRG are up 8.1% at $19.51 in a 52-week range of $14.29-$25.66.