( MIR) and
shares are surging on Monday morning, after a weekend announcement that the electricity companies will merge. The combined energy company, to be called
, will be one of the largest independent power producers in the U.S., with approximately 24,700 megawatts (MW) of electric generating capacity. GenOn Energy will have a market capitalization of $3.1 billion.
Mirant shares are up more than 17% in Monday morning trading, for a gain of just under $2 to $12.56. RRI Energy shares are up more than 12%, or approximately 50 cents to $4.44.
The all-stock deal will provide Mirant shareholders with 54% of the equity in newly created GenOn Energy, while RRI Energy shareholders receive approximately 46% of the equity in the new company.
Shares of Mirant and RRI Energy are experience heavy trading on the merger news. There were more than 17 million shares of RRI Energy traded on Monday morning, versus an average daily volume of 6.6 million. There were more than 7 million Mirant shares traded, versus an average daily volume just over 2 million.
The energy companies said in a Sunday release announcing the merger that they expect an annual cost savings of $150 million, which will start to be fully realized in January 2012.
RRI Energy owns and leases a total of 14,581 MW of generation assets in Southern California (3,392 MW), the Midwest (MISO) (1,696 MW), the Mid Atlantic (PJM) (6,952 MW) and the Southeast (1,911 MW).
Mirant owns and leases a total of 10,076 MW of generation assets in Northern California (2,347 MW), the Mid Atlantic (5,194 MW) and the Northeast (2,535 MW).
-- Reported by Eric Rosenbaum in New York.
Follow TheStreet.com on
and become a fan on
Copyright 2009 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.