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Harbert Management Corp. subsidiary Harbinger Capital Partners took matters into its own hands May 21 when the asset manager publicly released a letter it sent to the board of Calpine Corp., urging the company to make public a May 14 offer from NRG Energy Inc. to merge the two U.S. merchant generation giants.
Calpine followed Harbinger Capital's release with a statement of its own, confirming receipt of an unsolicited proposal from NRG. Calpine said the terms of NRG's proposal included an all-stock merger transaction at a fixed exchange ratio of 0.534 times, implying a premium of 6.7% based on the closing prices of both companies' stocks as of May 21. Calpine stock closed May 21 at $21.28, while NRG closed at $42.51.
The hedge fund, which controls 102,814,538, or 24%, of Calpine's outstanding shares, said it wrote the letter to Calpine's board to ensure all board members and shareholders are aware of the merger of equals offer NRG proposed in a letter sent to Calpine on May 14. In the letter, Harbinger Capital Managing Director Howard Kagan generally supported the merger offer.
"We believe this offer represents a good starting point and that the Board should immediately engage with NRG concerning the terms," Kagan wrote. "We have yet to identify anything objectionable about the offer that cannot be resolved through negotiation. We note that...