- - Sunday, July 22, 2012

PRINCETON — NRG Energy said Sunday that it reached an agreement to buy wholesale power provider GenOn Energy in an all-stock deal worth about $1.7 billion.

Under terms of the deal, GenOn Energy Inc. shareholders will get 0.1216 of an NRG Energy Inc. share for each of their GenOn shares. Based on NRG’s Friday closing stock price, the offer equates to about $2.20 per GenOn share. That represents about an 18 percent premium over Houston-based GenOn’s Friday closing stock price.

NRG, based in Princeton, N.J., sells power on the wholesale market and to retail customers in states that have deregulated their electric power industry. It said the acquisition will allow it to cut costs, while boosting efficiency and cash flow.

NRG expects the higher profits and lower costs stemming from the deal to increase its free cash flow by about $300 million per year.

Once the deal closes, NRG shareholders will own 71 percent of the combined company and GenOn shareholders will own 29 percent. Four members of GenOn’s board will join NRG’s board, with GenOn Chairman and CEO Edward Muller becoming the board’s vice chairman.

LABOR

Most states trail pre-recession job levels

Three years since the recession ended, 43 states have yet to regain the jobs they lost in the downturn. The figure is a reminder of how weak the nation’s job market remains.

The states that are the furthest behind in job growth are those that were hit hardest by the housing bust: Arizona, Florida and Nevada.

Overall, the U.S. economy has 3.5 percent fewer jobs than it did before the Great Recession, which began in December 2007. The national unemployment rate has been stuck at 8.2 percent.

As slow as the recovery in jobs has been, a few states are doing quite well. Seven have more jobs now than before the recession. Some - North Dakota, Texas and Alaska - are benefiting from an oil boom.

But most states have lagged behind.

AUTO

Sales weaken a bit in early July

DETROIT — The raft of gloomy economic news may be starting to hurt U.S. auto sales.

Industry analysts and dealers said this week that sales during the first half of July slowed a bit from the robust pace in June. But they still were expected to be better than July of 2011.

“It’s a bit slower than where we want it to be,” said Inder Dosanjh, owner of several General Motors dealerships in the San Francisco Bay area.

Dealers such as Mr. Dosanjh may be wondering if car buyers, who’ve largely ignored sobering economic headlines, are finally getting discouraged. A widely followed reading on consumer confidence has fallen for four straight months. Federal Reserve Chairman Ben S. Bernanke acknowledged this week that the economy has weakened.

For the first half of the year, sales of cars and trucks ran at an annual rate of 14.3 million, the best pace in 5 years. Car buyers bought everything from compacts to big pickups, making the auto industry a bright spot in the economy. The only hiccup came in May, when sales slipped to a 13.8 million annual rate as the stock market plunged. Buyers returned in June to drive sales back up to a 14.1 million rate.

EDUCATION

Study: Private student loans parallel subprime

Risky lending caused private student loan debt to balloon in the past decade, leaving many Americans struggling to pay off loans that they can’t afford, a government study says.

Private lenders gave out money without considering whether borrowers would repay, then bundled and resold the loans to investors to avoid losing money when students defaulted, according to the study released Friday.

Those practices are closely associated with subprime mortgage lending, which inflated the housing bubble and helped bring about the 2008 financial crisis.

“Subprime-style lending went to college, and now students are paying the price,” said Education Secretary Arne Duncan, whose department produced the report with the Consumer Financial Protection Bureau.

Mr. Duncan said the government must do more to ensure that people who received private loans enjoy the same protections as those who borrow from the federal government.

From wire dispatches and staff reports

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