NRG rides lost cause in Exelon fight; Metavante buyout holds antitrust risks; Dow closes above 8,000

By Cristal Cody

Tupelo, Miss., April 3 - NRG Energy Inc. again asked shareholders to reject the proxy fight over board nominees from Exelon Corp., but the power company's takeover offer is practically a foregone conclusion, an analyst told Prospect News on Friday.

In other deals, Metavante Technologies, Inc.'s buyout from Fidelity National Information Services, Inc. should close, though it carries competition risks, an analyst said Friday.

Meanwhile on Friday, Wall Street rallied and sent the Dow Jones Industrial Average back up above 8,000 for the first time since Feb. 9.

"We're seeing that the market's acting better," Bill O'Grady, chief market strategist with Confluence Investment Management LLC, told Prospect News.

"The economic numbers we have gotten have frankly not been that good, but they haven't been significantly worse than expected," he said.

Data released showed employers terminated 663,000 jobs last month and the national unemployment rate rose to 8.5%.

"The market's discounted a lot of bad news, so you're now starting to see less negative reaction to bearish numbers and more positive reaction to slightly bullish numbers," he said. "That's usually how bottoms are formed, [but] it's still a dangerous world out there and we're heading into earnings season."

The Dow rose 39.51 points, or 0.50%, to close at 8,017.59.

The broader indexes also made small gains.

The Standard & Poor's 500 index closed up 8.12 points, or 0.97%, at 842.50, while the Nasdaq Composite index added 19.24 points, or 1.20%, to end at 1,621.87.

NRG wishes on star

Exelon, a Chicago-based power utility, has launched a proxy contest to expand NRG's board by five members for a total of 19 directors as part of its fight to take over the company.

Exelon has offered 0.485 of an Exelon share for each share of NRG for a transaction valued at about $5.15 billion.

Princeton, N.J.-based NRG's board has repeatedly rejected the offer, but since February, shareholders already have tendered 51% of shares in the offer.

The offer expires June 26.

NRG said in a letter sent late Thursday to shareholders that Exelon's stock offer has dropped in value from $26.43 a share in October to $21.96 a share.

"NRG is not immune to the general state of the American economy either, but it is important that stockholders understand our firm belief that Exelon opportunistically seized on market anxiety and the free fall of stock values to launch its lowball offer, which does not value NRG's strong financial position and immense opportunities," the company said in the letter.

But NRG's latest plea is a "lost cause," an analyst said Friday.

"This is like wishful thinking," he said.

Exelon shares gained $1.72, or 3.67%, to close at $48.60 on Friday.

NRG's stock rose 80 cents, or 4.30%, to close at $19.40.

NRG's stock traded up because Exelon was on the rise.

Finance services consolidation

Fidelity National of Jacksonville, Fla., made the all-stock offer to acquire Milwaukee-based Metavante on Wednesday for about $2.94 billion.

The deal is valued at $4.4 billion with the assumption of Metavante's debt.

Under the terms of the deal, Metavante shareholders will receive 1.35 shares of Fidelity National's stock for each share of Metavante.

An analyst said Friday there is a strong strategic rationale for the merger but it includes antitrust concerns.

The two companies provide processing transaction and banking and payment services to the top 200 banks in the United States.

"The merger will combine the No. 2 and No. 3 players in the industry. In an industry dominated by four players, this could also create competition issues," the analyst said.

Brookfield, Wis.-based Fiserv, Inc. is considered the market leader in software and outsourcing for the financial industry with a 62% market share among large financial institutions, according to the analyst.

The transaction is expected to close in the third quarter.

"We believe that timing is likely to be driven by regulatory approvals," the analyst said. "Potential counter bids seem unlikely."

Metavante shares gained 31 cents, or 1.34%, to close at $23.43 on Friday.

Fidelity National's stock rose 14 cents, or 0.79%, to end trading at $17.84.

Shares of Fiserv closed at $37.01, up 17 cents, or 0.46%.

Mentioned in this article:

Exelon Corp. NYSE: EXC

Fidelity National Information Services Inc. NYSE: FIS

Fiserv, Inc. Nasdaq: FISV

Metavante Technologies, Inc. NYSE: MV

NRG Energy Inc. NYSE: NRG

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