NRG makes unsolicited offer for Calpine

Power generation company NRG Energy Inc. made an unsolicited offer to acquire electricity provider Calpine Corp. in an all-stock deal that values the combined companies at $22 billion.

Princeton, N.J.- based NRG (NYSE:NRG) has offered 0.534 share for each share of Calpine (NYSE:CPN). Based on NRG's Wednesday closing price of $42.51, the offer values each Calpine share at $22.70 -- or a 6.7 percent premium to Calpine's closing Wednesday price of $21.20.

Calpine, which splits its headquarters between San Jose and Houston, said its board will review the proposal and will be advised by Goldman Sachs.

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Calpine stock soared on the news, closing the day Thursday at $22.97, up 8 percent.

In a letter sent to Calpine, NRG said the deal would create benefits including the scale of the combined companies, various types and locations of power stations and tax benefits.

The deal would double NRG's capacity to about 45,000 megawatts in the U.S., or enough to power 36 million homes.

According to Hoover's Inc., Calpine controls more than 23,800 megawatts of generating capacity through interests in 60 gas-fired plants throughout the U.S. and 17 geothermal power plants in California.

In December 2005 the company went into bankruptcy after surges in gas costs, and exited bankruptcy protection on Jan. 31.