The combined company, which will have a market capitalization of about $3.1 billion, will be called GenOn Energy. It will bring together roughly 24,650 megawatts of electric generating capacity, operations from coast to coast and have total revenue of $4.13 billion, based on full-year 2009 figures.

GenOn will be led by Mirant Chairman and CEO Edward R. Muller until 2013, when he will retire and the top post will be taken by Mark M. Jacobs, RRI Energys current president and CEO. Jacobs will serve as GenOns president, chief operating officer and a director until that time.

There likely will be job cuts among the two companies 3,600 employees, but how many has not been decided, Jacobs told The Associated Press. Muller, who has been Mirant CEO since 2005, said that once he retires he has no plans to head another major company.

Mirant stockholders will receive 2.835 RRI common shares for each Mirant share they own. Based on RRIs Friday closing price of $3.95, that values Mirant at $11.20 per share - a 4 percent premium. Based on Mirants 143.9 million shares outstanding at March 8, the deal values Atlanta-based Mirant at $1.61 billion.

Mirant stockholders will own roughly 54 percent of the combined company, while shareholders of RRI Energy will own roughly 46 percent.

The two companies said they expect $150 million in annual cost savings starting in January 2012 from reductions in corporate overhead. The transaction, expected to close by the end of the year, is subject to regulatory and stockholder approvals and the refinancing of a portion of each companys existing debt.

GenOn will be based in Houston, where RRI Energy is headquartered, and the Mirant and RRI Energy corporate names will be phased out, according to the companies. The GenOn board will include 10 members - five from each of the two companies existing boards. Mirant Chief Financial Officer J. William Holden III will serve as GenOn CFO.

As for the name change, that decision was made because the companies wanted to show their employees they were creating a “merger of equals” and starting anew rather than one company acquiring another, executives said.

The merger is the second big transaction in the power industry this year. In February, FirstEnergy agreed to buy Allegheny Energy in a $4.7 billion stock deal that will create a company made up of 10 utilities with $16 billion in annual revenue.

The deal would conclude a remarkable turnaround for Mirant. In 2003, the company filed what was at the time the 11th largest bankruptcy in US history. In January 2006, it emerged from Chapter 11 protection after having reduced its work force and shaved billions in debt from its balance sheet as part of its return to the public markets.

Mirant later made a play for rival NRG Energy Inc., but rescinded its $8 billion bid to acquire the company after NRGs board rebuffed the unsolicited offer.

“Since Mirant came out of bankruptcy, it has been focused on delivering value to its owners,” Muller said in an interview. “We have tried various ways to do that, and some efforts didnt pan out. But we have through various cycles … been a healthy company and done many things we set out to do, including divesting our assets outside the United States at a very good time in the market.”

The combined cash balance of the companies as of Dec. 31 totaled $2.9 billion.

Mirant was advised by J.P. Morgan and Wachtell, Lipton, Rosen & Katz. Goldman, Sachs & Co. and Morgan Stanley acted as RRI Energys financial advisers and Skadden, Arps, Slate, Meagher & Flom LLP acted as legal counsel.

Source

CF Reporter: David Wong