Elliott teams with ex-TXU CEO for NRG Energy shake-up


Michael Flaherty

Jan 17, 2017

Elliott Management and private equity firm Bluescape Energy Partners have teamed up to buy a 9.4 percent stake in NRG Energy Inc (NRG.N) and said they may push to elect one or more directors to its board.

Elliott and Bluescape, which was founded by ex-TXU Corp. CEO John Wilder, said in a filing that NRG's shares were "deeply undervalued." The investors are seeking operational and financial improvements as well as the consideration of strategic initiatives at the company.

NRG, an electric power company with headquarters in Princeton, New Jersey and Houston Texas, saw its stock rise 5.9 percent to $15.47 on the New York Stock Exchange on Tuesday. NRG's market value is more than $4.6 billion.

"We are aware of the 13D filing that came in today. We are open to input from all our shareholders and we are committed to creating value for our shareholders," NRG said in a statement, referring to the document showing the stake purchase.

The filing marks the first time that Elliott has teamed up with another investment firm for a joint campaign aimed at quickly improving a company's share price.

Wilder is credited with overhauling electric utility TXU Corp., now known as Energy Future Holdings Corp. [EFHC.UL], before selling it in 2007 in the largest-ever leveraged buyout.

"This campaign looks very much pegged to Wilder and his turnaround skills," research firm Gordon Haskett said in a note on Tuesday.

While most of Elliott's activist campaigns have focused on the tech industry in recent years, the firm also has a track record of targeting energy companies.

Elliott waged a proxy fight against Hess Corp. (HES.N) in 2013 and received three board seats before a final shareholder vote occurred. It also pressed Marathon Petroleum (MPC.N) late last year for several changes, which the company addressed in an announcement earlier this month.

Including swaps, Elliott has a 6.9 percent exposure to NRG, while Bluescape's is 2.5 percent, according to the filing.