NRG Energy to Buy GenOn for $1.7 Billion The deal is the latest example of consolidation within the power industry, as companies seek to deal with falling electricity prices. NRG has pursued several transactions over the past decade, and GenOn was formed from the 2010 union of RRI Energy and Mirant. The combined company, which will retain the NRG name, will generate about 47,000 megawatts of energy throughout the East and West Coasts, as well as in the Gulf of Mexico region. The companies say that is enough capacity to power 40 million homes. "This industry has needed to consolidate on some level," David Crane, NRG's chief executive, said by telephone on Sunday. This deal creates the first player of this scale in the industry. Under the terms of the deal, NRG will pay 0.1216 of a share for each of GenOn's shares. Based on Friday's closing prices, that amounts to $2.19 each, a 20 percent premium for GenOn's stock. GenOn will essentially be absorbed into NRG, which will also retain its management team, led by Mr. Crane. NRG's chairman, Howard E. Cosgrove, will retain that role, and GenOn's chief executive, Edward R. Muller, will become vice chairman. It will maintain dual headquarters in Princeton, N.J., and Houston. Because NRG is the bigger company, with a market value of $4 billion, its shareholders will own 71 percent of the combined company. Investors in GenOn, which was valued at $1.4 billion on Friday, will own the rest. NRG directors will also hold 12 of the 16 seats on the combined company's board. One of the major selling points of the deal is cost savings. NRG expects to raise its annual earnings by $200 million by 2014, as well as save an average of $100 million in interest payments a year. Mr. Crane said that the deal would allow his company to expand its retail business, which sells power directly to consumers. He added that he does not expect the company to raise rates. Both companies have been looking for a way to bolster their sagging stock prices. NRG shares have fallen 27 percent in the last 12 months, while GenOn's have tumbled some 55 percent. Though the teams at NRG and GenOn have known each other for some time - six years ago, Mirant made a hostile bid for NRG - it was not until a few months ago that Mr. Muller called Mr. Crane to discuss a potential merger. The two men remembered getting together for dinner at Bouley, a restaurant in the TriBeCa district of Manhattan, to begin laying out a deal. The night they picked, however, happened to coincide with a visit by an Israeli government official and a security retinue. "I told Ed, "You really travel in style," " Mr. Crane said. From there, the two executives said, the process of combining their companies was very smooth, with little disagreement on the management or the board structures of the merged entity. "I would call this one of the smoothest deal processes ever," Mr. Muller said. Anyone who has our jobs has a sense of what's best to do for our owners. Both executives argued that they did not expect to run into antitrust or regulatory opposition, largely because the two companies do not directly compete in many markets. The transaction is expected to close by the end of next March. NRG was advised by Credit Suisse, Morgan Stanley and the law firm Kirkland & Ellis. GenOn was advised by JPMorgan Chase and the law firm Skadden, Arps, Slate, Meagher & Flom. Correction: July 22, 2012 An earlier version of this post misspelled the surname of GenOn Energy's chief executive. He is Edward R. Muller, not Mullen.