Exelon Corp. (EXC) boosted its hostile offer to acquire NRG Energy Inc. (NRG) by 12% on Thursday in an attempt to rebuild support for its bid to create the largest U.S. power generator by output.

The increased offer values NRG at $7.73 billion and is a reversal for Chicago-based Exelon, which had stood fast on the offer since launching its bid last fall. NRG Energy's board has staunchly opposed the deal, saying it undervalues the Princeton, N.J., power plant operator.

Exelon executives said they increased the offer after finding an additional $1.5 billion in cost savings and other synergies, including a 30% cut in operation and maintenance costs at NRG Energy and benefits from NRG's acquisition of Reliant Energy Inc.'s retail business in Texas.

"This is all about the long-term value that can be created by consolidation," Exelon Chairman and Chief Executive John Rowe said in a conference call Thursday.

In recent months, Exelon has come under increasing pressure to raise its offer as recent stock prices provided little if any premium for NRG Energy shareholders. Support by NRG Energy shareholders has waned, while analysts pointed to several factors, including the acquisition of the Reliant business and advancements in NRG's plans to build new nuclear reactors, requiring a higher offer.

In a statement Thursday, NRG Energy said it will review Exelon's proposal, telling shareholders not to take any action.

The new offer has risen to 0.545 of an Exelon share for each NRG share, up from 0.485 of a share. That represents a 7.9% premium to NRG Energy's closing share price of $26.05 Wednesday, while the old offer held no premium. The original exchange offer represented a 37% premium for NRG Energy shareholders when first announced in October.

To finance the new offer, Exelon estimates it would issue $1.1 billion in new equity, while selling a total of $1.6 billion in assets. Exelon already had planned to sell several power plants as part of the deal but added NRG Energy's Louisiana and international assets to its divestiture list.

Exelon said it is confident it could maintain its investment-grade ratings while meeting the financing needs of the transaction, including the refinancing of $4.7 billion of NRG's senior notes and other debt, if necessary.

The next key event in Exelon's hostile bid comes later this month. At NRG Energy's annual meeting July 21, Exelon is proposing expanding NRG's board and adding its own members as it tries to complete the deal. Rowe said during the conference call Exelon's new offer is its best and final.

Analysts said Exelon's increased offer may prove to be too little, too late, and shares of both companies dropped in morning trading. Exelon shares recently traded 2.3% lower at $50.36, while NRG Energy traded down 2.7% to $25.35.

"Ultimately, we are not sure if this offer is appealing enough for the NRG shareholders and have assumed that the deal does not go through," Shelby Tucker, an analyst at Oppenheimer & Co., wrote in a note to clients Thursday.

In Thursday's conference call Exelon also reaffirmed its second-quarter and full-year earnings estimates, while saying it would only issue new equity if the NRG Energy deal closes.

-By Mark Peters, Dow Jones Newswires; 212-416-2457; mark.peters@dowjones.com

(Kerry Grace Benn contributed to this report.)