NRG Energy Buys Texas Power Plant for $5.8B

By The Associated Press

WEST WINDSOR – NRG Energy Inc. agreed Sunday to buy privately held power generator Texas Genco LLC for $5.8 billion, in a deal that furthers consolidation in the electricity generation industry.

NRG will pay $4 billion in cash and $1.8 billion in common and preferred stock, and will also assume $2.5 billion in Texas Genco debt. The deal comes four months after Duke Energy Corp. agreed to acquire rival Cinergy Corp. in a stock deal worth nearly $9 billion.

In a statement, the two companies said the combination will create a premier wholesale power generation company with broad geographic reach.

Once the deal is completed, the combined company will have a domestic generating capacity of almost 24,000 megawatts.

"Texas Genco is an ideal strategic fit with NRG," David Crane, NRG’s president and CEO, said in a statement. "The strengths of its people and its assets align closely with our own, bolstering NRG’s platform for growth and our ability to drive value for our shareholders."

West Windsor-based NRG owns and operates power-generating plants in the Northeast, South Central and West Coast regions of the United States. The company also has ownership interests in power generating plants in Australia, Germany and Brazil.

Altogether the company has about 15,000 megawatts of power- producing capacity, about 2,000 megawatts internationally and the majority in the United States.

NRG, founded as a unit of Xcel Energy Inc. in 1989, built or acquired more than 50 power plants in the United States, Europe, Asia and South America. But the company, which had borrowed heavily to make the acquisitions, couldn’t pay its debt when the energy prices collapsed in 2001.

The company filed for bankruptcy protection, enabling it to eliminate about $6 billion in debt and restructure. NRG emerged from Chapter 11 bankruptcy in December 2003. The company moved its corporate headquarters in January from Minneapolis to New Jersey. NRG said in a statement that it expects the combined NRG and Texas Genco will increase NRG’S earnings and cash flow per share, giving the company greater financial strength and allowing it to pursue other growth opportunities.