Atlanta – Mirant Corp. withdrew its $8 billion hostile takeover bid for NRG Energy on Monday, ending for now a two-week saga that included a court battle, allegations of conflicts of interest, a rebellion of big stockholders and a demand by one large investor that Mirant be put up for sale.
In a prepared statement announcing Monday’s decision, Mirant chairman and chief executive Ed Muller expressed disappointment with the failed bid for Princeton, N.J.-based NRG.
“We are disappointed that NRG was unwilling to sit down with us to discuss what would have been a compelling opportunity to create significant value for both companies’ shareholders,” Muller said.
But a “long and contested pursuit is not in the best interests of Mirant and its shareholders,” the statement continued, saying that the company would continue efforts “to create value for Mirant’s shareholders.”
The company’s announcement came the same day that one of its large stockholders, the Pirate Capital LLC hedge fund, informed Atlanta-based Mirant that it intended to push for a special stockholders meeting and a new board if Mirant didn’t both drop its takeover bid and take steps to put itself on the block.
Mirant spokesman Jonathan Gasthalter said the company’s decision to drop its takeover bid wasn’t related to the Pirate Capital letter.
Pirate officials did not return a call for comment Monday. It’s unclear whether the hedge fund still plans to push for the second part of the demands included in its letter.
Mirant’s bid for NRG, though, definitely raised Mirant’s profile as an acquisition target, either in whole or in part.
In an Securities and Exchange Commission filing last week, Pirate Capital said it believed Mirant was a better acquisition than acquirer.
“We do not believe that entering into a hostile bidding war for NRG is in the best interest of Mirant shareholders. While we believe that consolidation in the power sector is necessary, we question whether Mirant should be a consolidator,” Pirate said.
The filing said Mirant’s first- quarter earnings and outlook proved the appeal of its assets.
“We believe shareholders would be substantially rewarded if Mirant put itself up for sale.”
Mirant, a spinoff of Southern Co., owns and operates independent power plants in the United States, the Philippines and the Caribbean.
Mirant emerged from a 2 1/2- year bankruptcy in January, after which its former creditors – or funds that bought its old debt – ended up owning most of its new stock.
NRG also is an independent power wholesaler, with domestic and international assets. It emerged from its own Chapter 11 filing in late 2003.
The merger dance between the companies began while Mirant was still in Chapter 11, when NRG was considering acquiring Mirant, according to bankruptcy court testimony.
The companies continued talking informally after that, according to letters and legal briefs that have flown between the companies over the past few weeks.
Mirant made its purchase offer to NRG’s board on May 10.
NRG officially rejected it 13 days later, saying that it was the wrong time for an NRG sale, that the price was too low and that too much of the offer came in the form of Mirant stock.
