Back to top

Analyst Blog

Zacks Equity Research

NRG-GenOn Merger Gets Investor Nod

AES NRG

 ZacksTrade Now

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

New Jersey utility, NRG Energy Inc’s (NRG - Analyst Report) proposed acquisition of GenOn Energy Inc. received approval from the shareholders of both companies, the Federal Trade Commission and the Texas regulatory body. However, the acquisition is still awaiting the green signal from the Federal Energy Regulatory Commission and New York Public Service Commission.

The GenOn buyout was announced by NRG Energy in July 2012 for an amount of $1.94 billion. The acquisition is expected to be closed in early 2013 provided all regulatory nods get through. With the GenOn purchase, NRG Energy’s total generating capacity will climb to 47,000 megawatts and enable the company to become one of the key competitive utility providers in the U.S.

GenOn stakeholders’ will receive 0.1216 of an NRG share. NRG Energy’s shareholders will hold 71% of the overall stock while GenOn’s will own 29%. 

The Texas acquisition is critical to NRG Energy’s expansion plans and will become a major cornerstone for growth. Besides, the merger of GenOn will help in substantially improving NRG Energy’s upcoming financials as its third-quarter loss of 1 cent per share fell more than 50 cents than the year-ago quarter figure.

NRG Energy will also accrue operational benefits like cost synergies, maximizing efficiencies and enhancing cash flows which would significantly drive up margins and further encourage investment prospects.

However, the New Jersey area has been one of the worst affected by Hurricane Sandy and will impact NRG Energy’s operations in the subsequent quarters. Taking this into account, the company has trimmed its adjusted EBITDA outlook for 2012 to the range of $1,875 million to $1,925 million from its prior expectation of $1,825 million to $2,000 million. The Zacks Consensus Estimates for the fourth quarter and full year 2012 currently stand at 8 cents and 82 cents per share, respectively.

NRG Energy holds a short-term Zacks #3 Rank (Hold rating). NRG Energy competes head-to-head with The AES Corporation (AES - Analyst Report). AES reported favorable results in the third-quarter 2012. AES Corporation’s business is spread across the U.S., Bulgaria and Latin America which lends constancy to its operations unlike NRG Energy’s which is primarily confined to the U.S.

Based in Princeton, New Jersey, NRG Energy Inc. is a wholesale power generation company engaged in the ownership, development, construction, and operation of power generation facilities.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
BITAUTO HOLD BITA 35.33 +14.82%
ANI PHARMACE ANIP 24.79 +14.66%
E HOUSECHINA EJ 10.99 +9.24%
CANADIAN SOL CSIQ 26.97 +7.15%
INTERNATIONA ICAGY 33.30 +5.38%