Mirant Corporation And RRI Energy To Merge
April 11 2010 - 2:52PM
Dow Jones News
U.S. independent power generators Mirant Corp. (MIR) and RRI
Energy Inc. (RRI) announced plans to merge Sunday in a bid to cut
costs and strengthen their financial standing in the face of
challenging wholesale power markets.
Mirant and RRI Energy would become GenOn Energy, creating one of
the nation's largest merchant power companies.
Both generators rely on market prices rather than regulated
rates for the power they produce and don't own electric utilities.
The all-stock deal is considered a merger of equals, with
shareholders receiving equity in the new company based on their
recent share prices.
Investors will be issued shares based on the volume-weighted,
average price for the last 10 trading days, with Mirant
stockholders getting a fixed ratio of 2.835 shares of RRI Energy
for each of their shares.
On Friday, Mirant shares closed at $10.73, while RRI Energy
shares closed at $3.95.
The deal comes as merchant power companies face near-term
challenges. Wholesale power prices have been hit hard by
back-to-back years of declining electricity demand in the U.S. and
low natural gas prices, which have a strong influence on
electricity prices.
The new, combined company will have generation in most U.S.
electricity markets, with a total power plant capacity of nearly
25,000 megawatts, and a combined market capitalization of $3.1
billion.
-By Mark Peters, Dow Jones Newswires; 212-416-2457;
mark.peters@dowjones.com
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