Clearing the last hurdle needed to merge, Houston-based Reliant Resources Inc. received approval yesterday from federal energy regulators to buy Orion Power Holdings Inc. of Baltimore for $4.8 billion in cash and debt.
The Federal Energy Regulatory Commission ruled that Reliant's acquisition of 81 power plants owned by Orion in Pennsylvania, Ohio, West Virginia and New York will not hurt competition or raise electricity prices. The merger will create the second-largest independent power producer in the country.
In December, the Department of Justice granted early termination of a 30-day waiting period for the merger and the New York Public Service Commission ruled that the proposed merger will have no adverse impact on ratepayers.
"We're now in a position to close the deal on the 19th," said Rahul Advani, Orion's director of investment relations and finance.
"We've gotten all the requisite approvals, including this last one from FERC. We had stated that we hoped to close this deal in the first quarter of 2002. We're all pretty excited that we're on target for that time frame."
Under the deal, Reliant will pay $26.80 a share for Orion, or $2.9 billion. Reliant also will assume $1.8 billion in debt. Shareholders in Orion include Constellation Energy Group Inc. of Baltimore and Goldman Sachs.
The deal gives Reliant Resources entry into New York's power market, where Orion owns plants in New York City and upstate. Since Orion's inception in March 1998, the company has invested more than $4 billion in power plants that produce nearly 6,000 megawatts of electricity, or enough energy for 6 million homes.
Reliant, a publicly traded merchant energy company that is majority-owned by Reliant Energy Inc., has nearly 18,000 megawatts in generating capacity in operation, under construction, or under contract in the United States.
Shares of Orion rose 40 cents to close at $26.60. Reliant Resources closed at $11.60, up 41 cents.