Two days after NRG Energy flatly rejected Exelon Corp.’s acquisition offer, saying the $6.2 billion proposal “grossly” undervalued the company, Exelon launched a hostile bid for the Princeton, N.J., company, taking its offer directly to NRG shareholders. The U.S. power giant has also filed suit against NRG’s directors, and it has reportedly threatened to expand the size of NRG’s board.

Exelon said on Wednesday it would launch an exchange offer for all outstanding shares of NRG at a fixed exchange ratio of 0.485 Exelon shares for each NRG share.

“While we would have greatly preferred to enter into direct negotiations with NRG’s board and management, their decision to reject our proposal, without any discussion with us as to the merits or structure of our proposal, has left us with no choice but to bring the offer directly to the NRG shareholders,” John W. Rowe, Exelon chairman and CEO, said in a statement.

In a written response to NRG’s Nov. 9 letter (PDF) that rejected Exelon’s offer, Rowe outlined the “compelling strategic, operational and financial” value drivers of a combined Exelon-NRG. Among those considerations was that the merger deal would have created the single largest power company in the U.S., and it would “create superior value for all shareholders.”

But, in a separate letter that NRG made public (PDF), Exelon informed NRG that it would present a proposal at NRG’s annual meeting to stockholders in May 2009 to expand the size of the NRG board of directors “such that the directors to be elected at that meeting will constitute not less than 50% of the NRG Board. Furthermore, Exelon … intends to nominate directors to fill the newly created directorships,” the letter said.

NRG has advised shareholders to take no action at this time on the exchange offer.

In a letter released Tuesday, NRG told shareholders they could expand the company’s board. “It seems plain that your letter constitutes an effort to manufacture an issue for litigation,” NRG wrote. “Rather than wasting time and resources on manufactured issues, NRG prefers to maintain its focus on maximizing shareholder value.”

Exelon also last week filed suit against NRG and its directors, alleging, among other things, a breach of fiduciary duty by NRG’s directors for various reasons, including the failure of the NRG directors to give appropriate consideration to, and take appropriate action on, the proposal announced by Exelon on Oct. 19.

On Friday, Dow Jones Newswires reported that NRG had asked the Delaware Chancery Court to dismiss Exelon’s suit, saying Exelon’s suit fails to show NRG’s board is breaching its fiduciary responsibility by rejecting the unsolicited takeover offer.

Sources: Exelon, NRG, Dow Jones Newswire