Exelon Corporation Offers to Acquire NRG Energy, Inc. in $6.2 Billion Transaction

Exelon Corporation announced its proposal to acquire Princeton, N.J.-based NRG Energy, Inc.. Exelon has offered to acquire all of the outstanding NRG common stock in an all-stock transaction with a fixed exchange ratio with a value of $26.43 for each NRG common share, representing a total equity value of approximately $6.2 billion for NRG based on Exelon’s closing price on October 17.

In a letter delivered today to NRG President and CEO David Crane and Chairman Howard Cosgrove, Exelon proposed to acquire all of NRG’s outstanding common stock in an all-stock transaction with a fixed exchange ratio of 0.485 Exelon shares for each NRG share, which represents a value of approximately $26.43 for each NRG common share, based on the Exelon closing price of $54.50 in trading on October 17, 2008. The offer represents a 37% premium to the October 17 closing price for NRG shares.

In the all-stock transaction, which is intended to be tax-free, NRG common shareholders would exchange their stock for Exelon stock, which would provide NRG shareholders the opportunity to participate in the future growth of the largest and most diversified power company in the nation with a substantially improved credit profile.

“An Exelon-NRG combination would result in a total enterprise value of approximately $60 billion with a generating capacity of around 47,000 megawatts, or enough electricity to serve nearly 45 million homes,” said John W. Rowe, Chairman and CEO of Exelon. “This combination would not only diversify Exelon’s generation portfolio geographically, it would also create immediate earnings and cash flow accretion. We believe a combination of Exelon and NRG would represent an exceptional value for shareholders of both companies.”

Strategic Benefits of a Combined Exelon-NRG

* Enhanced Scope and Scale – The combined company would constitute the largest power company in the U.S., with sufficient financial and operating strength to address the nation’s increasingly urgent energy needs. The combined company would have an enterprise value of approximately $60 billion and a market capitalization of $40 billion.
* Increased Generation Efficiency – Significant efficiencies of scale would be realized from the combination of Exelon and NRG. The combined company’s approximately 47,000 MW fleet (after giving effect to planned divestitures associated with regulatory approvals) would include 18,000 MW of nuclear generation.
* Unparalleled Fuel and Geographic Diversification – The combined company would have a more highly diversified mix of generation capacity with a presence in four major domestic competitive power generation regions and a diversified fuel mix using uranium, natural gas, coal and oil.
* Financial Strength – NRG is highly leveraged with over $8 billion of debt and a credit rating of Ba3/B+. The combination of Exelon and NRG will reduce the leverage associated with NRG’s current business and enhance its credit rating. Although the combination is expected to reduce Exelon’s credit ratings, Exelon is committed to a path to restore the ratings of the combined company to Exelon’s current ratings.
* Stock Appreciation Potential – The anticipated earnings and cash flow accretion, and the resulting strong balance sheet, offer shareholders of the combined company greater potential for stock appreciation.
* Stock Liquidity – With the largest market capitalization in the industry, and an exceptional record of growth over the past seven years, Exelon stock represents a more liquid investment for NRG shareholders and a more solid track record of value return for its shareholders.
* Substantial Synergies – The combined company would realize substantial efficiencies through the combination of solid operational, financial and service capabilities. Based on a preliminary analysis of publicly available information, Exelon expects the proposed transaction to be accretive to earnings and cash flow in the first full calendar year of operations of the combined company, before giving effect to purchase accounting and other adjustments that may result from due diligence investigation.

Mr. Rowe added, “We would welcome the opportunity to sit down with NRG’s CEO and board of directors and to move forward quickly with this significant opportunity for value creation on all fronts.”

Exelon has scheduled a conference call for 11:00 AM ET (10:00 AM CT) on October 20, 2008 to discuss this announcement and the proposed transaction. The call-in number in the U.S. and Canada is 800-690-3108, and the international call-in number is 973-935-8753. If requested, the conference ID number is 70034152. Media representatives are invited to participate on a listen-only basis. The conference call will be web-cast. Accompanying slides and the conference call Webcast will be available on Exelon’s Web site: www.exeloncorp.com. (Please select the Investor Relations page.) The Webcast and conference call transcript will be archived on Exelon’s Web site: www.exeloncorp.com. (Please select the Investor Relations page.)