NEW YORK (MarketWatch) -- NRG Energy shares rallied 29% Monday, playing off rival electricity generator Exelon Corp.'s unsolicited acquisition bid, valued at about $6.2 billion, to create what would be the largest U.S. power company.

Late Sunday, Exelon EXC, -1.17% said it wrote to the top two executives laying out terms including an exchange rate of 0.485 Exelon share for each NRG NRG, +0.61% share. The proposal represents a premium of roughly 37% over NRG's closing price on Friday.

The proposal marks a sign that depressed stock prices born out of the credit crisis could set the stage for greater merger-and-acquisition activity in the energy sector.

NRG's shares jumped $5.67 to $25. Exelon shed 9 cents to $54.59.

If a merger's consummated, the combined entity would have a generation capacity of about 47,000 megawatts, or enough to supply nearly 45 million homes. Exelon would greatly expand its presence in key growth areas of Texas and the Northeast.

"This combination would not only diversify Exelon's generation portfolio geographically, it would also create immediate earnings and cash-flow accretion," said Exelon CEO John Rowe.

In a conference call with analysts, Exelon said it plans to pursue the deal as either a friendly or an unfriendly offer.

NRG, which has yet to formally respond, acknowledged that it received the buyout proposal and that it's reviewing it.

A combination would improve the credit rating of NRG -- which has more than $8 billion of debt -- and would also reduce its leverage. Exelon conceded, however, that its own credit rating would suffer from the deal.

According to the text of the letter sent to NRG, the chief executives of the two companies met at the end of September to discuss a potential deal.

One analyst had a bullish take on the deal.

"We would view a combination between Exelon and NRG positively, allowing Exelon to capture incremental synergies to supplement its already strong growth outlook," wrote BMO Capital Markets analyst Michael Worms in a note to clients.

NRG's bid to build a new nuclear power plant in Texas also presents a plus for Exelon, he added. However, the deal is far from done.

"This transaction was unsolicited ... and at this time, NRG's management has only indicated that it will review the proposal," Worms added.

In a separate statement, NRG confirmed it had received an unsolicited proposal and said its board of directors will review the offer and "determine an appropriate response."

The company also advised its shareholders to take no action until the board's review is complete.

The combined company would include 18,000 megawatts of nuclear energy.

NRG operates about 10,800 megawatts in Texas, 7,000 megawatts in the Northeast, 2,900 megawatts in the South and 1,000 megawatts in Australia and Germany.

Chicago-based Exelon already ranks as one of the nation's largest electric utilities, with more than $15 billion in annual revenue. Exelon lists 5.2 million customers in Illinois and Pennsylvania. It also operates the largest fleet of nuclear power plants in the U.S. Its operating units include ComEd and Peco, as well as power generation and power trading businesses.

Berkshire Hathaway BRK.A, -1.30% BRK.B, -1.45% , the investment vehicle of billionaire investor Warren Buffett, bought around 3.2 million shares of NRG during the second quarter. See archived story.