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Asset Sales and Restructuring in the Cards at NRG Energy After Elliott Deal

Elliott Management's Paul Singer

Asset sales, a restructuring and even a possible sale of the business may be in the cards for NRG Energy (NRG) after activist investor Elliott Management's Paul Singer and a private equity partner on Monday reached a settlement with the Houston-based company to add two dissident directors to its board.

Specifically, NRG Energy agreed to add C. John Wilder, the executive chairman of Dallas-based PE firm Bluescape Partners, Elliott Management's partner in the NRG Energy campaign, as well as Barry Smitherman, a former top regulator and investment banker in Texas. The deal will also involve the resignation of two incumbent directors, including the company's chairman, keeping NRG's board's size to 13-members.

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Activist investors often seek to have companies set up strategic advisory board subcommittees to help drive their M&A agenda. Such a panel was an essential part of the Elliott settlement, which included the formation of a new board committee to consider "broader strategic alternatives" such as a sale. News of the agreement sent NRG Energy's stock price up 1.5% to $16.90 a share.

The deal comes roughly a month after Elliott launched a public campaign at NRG Energy. The activist fund has been on a tear of late when it comes to driving significant M&A at targeted companies. Cabela's (CA) , American Capital, Qlik Technologies, Mentor Graphics and LifeLock, all sold last year under Elliott pressure.

It's possible a sale or major restructuring could be in the cards at NRG Energy as well. As part of the deal...


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