By David French and Mrinalika Roy
(Reuters) - Activist investor Elliott Investment Management LP is calling for a boardroom overhaul and strategic changes at NRG Energy (NYSE:NRG) after taking a position in the U.S. power company for the second time in six years.
The investment firm, which also pushed for changes at NRG in 2017, wants the company to appoint five new independent board members it has identified and unwind its recent acquisition of home security firm Vivint Smart Home (NYSE:VVNT) Inc.
Elliott on Monday disclosed a more than 13% economic interest in NRG, which the activist fund said was worth around $1 billion. It did not say how much, if any, of that interest was in NRG stock.
News of Elliott's involvement initially sent NRG's shares up 4.5%, before they gave up some of the gains to trade 3% higher at $33.78 per share around 1:15 p.m. EDT.
"NRG is committed to creating shareholder value and appreciates Elliott's interest," NRG responded in a statement.
"The company welcomes all shareholders' input and looks forward to an open dialogue with Elliott."
Elliott is asking NRG to implement cost cuts worth $500 million and is also pushing for a strategic review to help the company refocus on its core business of supplying power.
This includes offloading NRG's home services unit, which includes Vivint. The $2.8 billion cash purchase was completed in March.
Elliott's recommendations, along with a new capital allocation framework to return to shareholders at least 80% of free cash flow, could create over $5 billion of shareholder value and push NRG's stock price above $55 in the next 18 months, it said.
In February 2017, Elliott and NRG announced a settlement agreement that resulted in the appointment of two board members. Later that year, NRG announced a revised business plan which included plans to sell assets and reduce debt.