"Heaven has no rage like love to hatred turned; nor hell a fury like a woman scorned." -- William Congreve, TheMourning Bride
Strap yourselves in, folks, because this one could at least be fun to watch.
We found out Tuesday that independent power producer Mirant (NYSE: MIR ) had sent a letter to equally independent power producer NRG Energy (NYSE: NRG ) this month suggesting a merger between the two. Under the terms, the 50/50 offer of cash and stock would have valued NRG at $57.16 -- a 33% premium to Tuesday's price, but only about a 19% premium on the day of the offer (May 10).
Not only did NRG Energy reject the deal unanimously and without discussion, but it also took a few swipes at Mirant in the process. It not only pointed to Mirant's relatively short trading history since emerging from bankruptcy, but also called into question Mirant's growth prospects and risk profile. Perhaps stung by this rebuke, Mirant decided to take this all public -- no doubt hoping to put some pressure on NRG management and tantalize some shareholders with a quick gain.
As an observer who likes both companies, I think neither side is completely right or wrong. I think NRG management was off base in questioning Mirant's growth prospects and risks to the extent that it did, but I think it's right that the price offered wasn't good enough. On the other side, Mirant is definitely right that a Mirant-NRG Energy tie-up would make sense, but I think it's overstating the value of the deal relative to what I think NRG Energy is worth all on its own.
And now we can all sit back and see how this plays out. This may also give the spurs to more consolidation in the power industry. Companies like Dominion (NYSE: D ) and TXU (NYSE: TXU ) could, perhaps, have an eye toward acquisition.
Frankly, I wish both parties had kept their traps shut: I was looking to buy some NRG Energy on this pullback, but thanks to this all going public, I can forget about that juicy discount that was in the stock. Mirant may yet come back with a higher offer (though I'd have to question the financial wisdom of the leverage that would most likely have to be involved). Whatever the case proves to be, it seems pretty likely that independent power players are now going to be getting a lot more attention in the market.
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).
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