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April 12, 2010 8:14 PM

Skadden, Wachtell Tapped for Mirant/RRI Power Producer Merger

Posted by Claire Zillman

In a $1.6 billion all-stock transaction announced Sunday, Mirant Corporation and RRI Energy, Inc., said they will combine their companies to create a new company, GenOn Energy.    

If successful, the deal will create the second-largest independent power producer in the nation after Exelon Corp., according to Bloomberg, with 24,700 megawatts of electric-generating capacity and a market value of $3.1 billion. The new company, which generates electricity using coal, natural gas, and oil, will be headquartered in Houston, where RRI is based. 

Under the terms of the agreement, Mirant stockholders will receive 2.835 shares of RRI common stock for every share of Mirant common stock they own, according to the companies' statement announcing the deal. The merger will provide the companies with an annual cost savings of $150 million, the statement says.

The deal is the second major power sector transaction of the year. In February, FirstEnergy Corp and Allegheny Energy Inc. announced a $4.7 billion merger; that deal is still awaiting regulatory approval, according to The Wall Street Journal. (FirstEnergy's counsel, Rick Burdick of Akin Gump, was a Dealmaker of the Week.) The deal seemed to jump-start a round of consolidation among energy companies, a prediction Duke Energy chief executive officer Jim Rogers made in the Charlotte Business Journal in February. Skadden, Arps, Slate, Meagher & Flom partner Michael Rogan, leading the team representing RRI on the deal, says the merger will allow two big players in a highly competitive energy sector to increase their effectiveness and reduce overhead costs. 

Wachtell, Lipton, Rosen & Katz represented Atlanta-based Mirant, led by corporate partners Daniel Neff and Gregory Ostling. They were joined on the deal by partners Joseph Larson, Jeremy Goldstein, Joshua Holmes, Richard Mason, and Eric Rosof. Neff did not immediately respond to a request for comment. 

RRI Energy turned to Skadden, Arps, Slate, Meagher & Flom; partners Michael Rogan, Frank Bayouth, John Moot, John Lyons, and Jessica Hough led the firm's team. Rogan says Skadden has represented RRI for about nine years and frequently advises the energy company on M&A and securities matters and SEC filings. Last year, the firm represented RRI--then known as Reliant Energy--in the $287.5 million sale of its retail business to NRG Energy.

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