Mirant Corporation (NYSE: MIR) and RRI Energy, Inc. (NYSE: RRI)
announced today that they have entered into a definitive agreement
to create GenOn Energy, which will be one of the largest
independent power producers in the United States, with
approximately 24,700 megawatts (MW) of electric generating capacity
and a pro forma market capitalization of $3.1 billion. The
transaction is structured as an all-stock, tax-free merger.
Under the terms of the merger agreement, which has been approved
unanimously by the Boards of Directors of both companies, Mirant
stockholders will receive a fixed ratio of 2.835 shares of RRI
Energy common stock for each share of Mirant common stock they own.
The ratio reflects an at-market transaction based on the
volume-weighted average price for the preceding 10 trading days.
Upon closing, which is expected before the end of 2010, Mirant
stockholders will own approximately 54% of the equity of the
combined company and RRI Energy stockholders will own approximately
46%.
Edward R. Muller, chairman and chief executive officer of
Mirant, will be chairman and chief executive officer of the
combined company until 2013, when he plans to retire. Mark M.
Jacobs, president and chief executive officer of RRI Energy, will
be president and chief operating officer of GenOn and will serve on
its board. Jacobs is to succeed Muller as CEO in 2013. J. William
Holden III, currently chief financial officer of Mirant, will be
chief financial officer of GenOn. The GenOn Board of Directors will
be comprised of 10 directors, with five members of the current
Mirant Board and the five members of the current RRI Energy Board.
GenOn’s corporate headquarters will be located in Houston.
The merger brings together two organizations with complementary
electric generating assets and proven operational excellence,
enabling GenOn to derive substantial near- and long-term benefits
from significant cost savings, greater scale, geographic diversity,
and increased financial strength and flexibility. GenOn will have a
strategically balanced presence across key regions, including the
Mid-Atlantic, California, the Northeast, the Southeast and the
Midwest.
Compelling Strategic
Rationale
- Significant Consolidation
Savings. Stockholders of both companies will benefit from
significant value creation driven by expected annual cost savings
of $150 million. These costs savings will come from reductions in
corporate overhead and will be realized fully starting in January
2012.
- Increased Financial Strength and
Flexibility. The combined cash balance of the companies as of
December 31, 2009 was $2.9 billion, and the merged company will
have ample liquidity. GenOn’s strong balance sheet and enhanced
financial flexibility will provide it with added stability through
industry cycles and position it to benefit from an improvement in
market fundamentals.
- Enhanced Diversity Across
Generation Fleets. GenOn will be strategically well-positioned to
serve key geographic markets. RRI Energy owns and leases a total of
14,581 MW of generation assets in Southern California (3,392 MW),
the Midwest (MISO) (1,696 MW), the Mid Atlantic (PJM) (6,952 MW)
and the Southeast (1,911 MW). Mirant owns and leases a total of
10,076 MW of generation assets in Northern California (2,347 MW),
the Mid Atlantic (5,194 MW) and the Northeast (2,535 MW). Both
companies generate electricity utilizing coal, natural gas and
oil.
“Bringing together RRI Energy and Mirant is a true merger of
equals, combining two companies with complementary strengths, a
shared strategic vision and a commitment to value creation,” said
Mr. Muller. “This compelling combination will create tremendous
value for stockholders of both companies as our business benefits
from cost savings, greater scale, and enhanced financial strength
and flexibility.”
“We are committed to delivering the cost savings benefits and
successfully integrating Mirant and RRI Energy,” said Mr. Jacobs.
“We will bring together the best operating practices from both
organizations, building on our excellent track records.”
The combined fleets are largely complementary, with limited
overlap in their respective operating regions. The transaction is
subject to customary closing conditions, including approval by the
stockholders of RRI Energy and Mirant, U.S. antitrust approval and
approval by the Federal Energy Regulatory Commission (FERC). The
closing is also subject to the refinancing of a portion of each
company’s existing debt.
Mirant’s financial advisor was J.P. Morgan and its legal advisor
was Wachtell, Lipton, Rosen & Katz. Goldman, Sachs & Co.
and Morgan Stanley acted as RRI Energy’s financial advisors and
Skadden, Arps, Slate, Meagher & Flom LLP acted as RRI Energy’s
legal counsel.
Additional information on the transaction can be found at
www.mirantrrimerger.com.
Conference Call and Webcast
Details
The management of both companies will host a joint conference
call and live webcast on Monday, April 12, 2010 at 8:30 a.m.
ET/7:30 a.m. CT to discuss this announcement. The companies welcome
all members of the investment community to listen to the call live
by dialing into (877) 218-1796 in the U.S. or (574) 941-1407
outside the U.S. and providing the passcode: 67940730. The live
webcast of the call can be accessed at www.mirantrrimerger.com,
www.mirant.com and www.rrienergy.com. An audio replay of the call
will be available approximately three hours after the call’s
conclusion and can be accessed by calling (800) 642-1687 in the
U.S. or (706) 645-9291 outside the U.S. and entering the passcode:
67940730.
Investor Luncheon
Webcast
The management of both companies will host a live webcast of an
investor luncheon on Monday, April 12, 2010 at 12:00 p.m. ET/11:00
a.m. CT to discuss this announcement. The live webcast can be
accessed at www.mirantrrienergy.com, www.mirant.com and
www.rrienergy.com.
About Mirant Corporation
Mirant is a competitive energy company that produces and sells
electricity in the United States. Mirant owns or leases more than
10,000 megawatts of electric generating capacity. The company
operates an asset management and energy marketing organization from
its headquarters in Atlanta. For more information, please visit
http://www.mirant.com.
About RRI Energy, Inc.
RRI Energy, Inc., based in Houston, provides electricity to
wholesale customers in the United States. The company is one of the
largest independent power producers in the nation with more than
14,000 megawatts of power generation capacity across the United
States. These strategically located generating assets use natural
gas, fuel oil and coal. RRI routinely posts all important
information on its Web site at http://www.rrienergy.com/.
Forward Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. Forward-looking statements are typically identified by words
or phrases such as “will,” “anticipate,” “estimate,” “expect,”
“project,” “intend,” “plan,” “believe,” “target,” “forecast,” and
other words and terms of similar meaning. These forward-looking
statements involve a number of risks and uncertainties. RRI Energy
and Mirant caution readers that any forward-looking statement is
not a guarantee of future performance and that actual results could
differ materially from those contained in the forward-looking
statement. Such forward-looking statements include, but are not
limited to, statements about the benefits of the proposed merger
involving RRI Energy and Mirant, including future financial and
operating results, RRI Energy’s and Mirant’s plans, objectives,
expectations and intentions, the expected timing of completion of
the transaction, and other statements that are not historical
facts. Important factors that could cause actual results to differ
materially from those indicated by such forward-looking statements
are set forth in RRI Energy’s and Mirant’s filings with the
Securities and Exchange Commission. These include risks and
uncertainties relating to: the ability to obtain the requisite RRI
Energy and Mirant shareholder approvals; the risk that Mirant or
RRI Energy may be unable to obtain governmental and regulatory
approvals required for the merger, or required governmental and
regulatory approvals may delay the merger or result in the
imposition of conditions that could cause the parties to abandon
the merger; the risk that a condition to closing of the merger may
not be satisfied; the timing to consummate the proposed merger; the
risk that the businesses will not be integrated successfully; the
risk that the cost savings and any other synergies from the
transaction may not be fully realized or may take longer to realize
than expected; disruption from the transaction making it more
difficult to maintain relationships with customers, employees or
suppliers; the diversion of management time on merger-related
issues; general worldwide economic conditions and related
uncertainties; and the effect of changes in governmental
regulations; and other factors discussed or referred to in the
“Risk Factors” section of each of RRI Energy’s and Mirant’s most
recent Annual Report on Form 10-K filed with the Securities and
Exchange Commission. Each forward-looking statement speaks only as
of the date of the particular statement and neither RRI Energy nor
Mirant undertake any obligation to publicly update any
forward-looking statement, whether as a result of new information,
future events or otherwise.
Additional Information and Where
To Find It
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. In connection with the
proposed merger between RRI Energy and Mirant, RRI Energy will file
with the SEC a Registration Statement on Form S-4 that will include
a joint proxy statement of RRI Energy and Mirant that also
constitutes a prospectus of RRI Energy. RRI Energy and Mirant will
mail the joint proxy statement/prospectus to their respective
shareholders. RRI Energy and Mirant urge investors and
shareholders to read the joint proxy statement/prospectus regarding
the proposed merger when it becomes available, as well as other
documents filed with the SEC, because they will contain important
information. You may obtain copies of all documents filed with
the SEC regarding this transaction, free of charge, at the SEC’s
website (www.sec.gov). You may also obtain these documents, free of
charge, from RRI Energy’s website (www.rrienergy.com) under the tab
“Investor Relations” and then under the heading “Company Filings.”
You may also obtain these documents, free of charge, from Mirant’s
website (www.mirant.com) under the tab “Investor Relations” and
then under the heading “SEC Filings.”
Participants in The Merger
Solicitation
RRI Energy, Mirant, and their respective directors, executive
officers and certain other members of management and employees may
be soliciting proxies from RRI Energy and Mirant shareholders in
favor of the merger and related matters. Information regarding the
persons who may, under the rules of the SEC, be deemed participants
in the solicitation of RRI Energy and Mirant shareholders in
connection with the proposed merger will be set forth in the joint
proxy statement/prospectus when it is filed with the SEC. You can
find information about RRI Energy’s executive officers and
directors in its definitive proxy statement filed with the SEC on
April 1, 2010. You can find information about Mirant’s executive
officers and directors in its definitive proxy statement filed with
the SEC on March 26, 2010. Additional information about RRI
Energy’s executive officers and directors and Mirant’s executive
officers and directors can be found in the above-referenced
Registration Statement on Form S-4 when it becomes available. You
can obtain free copies of these documents from RRI Energy and
Mirant using the contact information above.
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