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(Reuters) - Power company Exelon Corp (EXC.N) struck a deal to buy rival Constellation Energy Group (CEG.N) for $7.9 billion in a bid to become the largest generator of competitively priced electricity in the United States.
It would be the latest in a string of deals in the fragmented U.S. utility industry, which faces new costs to upgrade power grids and meet environmental controls.
It is Exelon Chief Executive John Rowe's latest -- and likely last -- attempt to transform his company through acquisitions. Exelon was thwarted in efforts to buy independent power producer NRG Energy Inc (NRG.N) in 2009, Public Service Enterprise Group (PEG.N) in 2006, and Illinois Power in 2003.
The combined company will keep the Exelon name and its headquarters in Chicago. Rowe plans to retire after the deal closes, and Exelon Chief Operating Officer Christopher Crane will become the new company's CEO. Constellation CEO Mayo Shattuck will become executive chairman.
"This enterprise will have the scale and financial strength to drive expansion in competitive energy markets, as well as new investment in the next wave of clean generation and sustainable products and services," Shattuck said.
Constellation shareholders will receive 0.93 Exelon share for each Constellation share, the companies said in a statement.
The offer values Constellation at $38.59 a share -- 12.5 percent above its Wednesday closing price of $34.30.
Exelon said the deal is expected to increase its 2013 earnings by more than 5 percent.
Exelon, among the leading U.S. utilities and the nation's top nuclear power company, will add 1.2 million customers to its existing 5.4 million. The combined company will serve Maryland, Illinois and Pennsylvania.
About 55 percent of the new entity's power generation fleets will be nuclear, 24 percent natural gas, 8 percent renewable and hydro, 7 percent oil and 6 percent coal.
Exelon shares were off 35 cents ay $41.14 in morning trade, while Constellation was up 3.5 percent to $35.49.
REGULATORY HURDLES
The companies expect the deal to close early in 2012. But utility deals in the United States are usually drawn-out procedures that face tough scrutiny from states and regulators.
Constellation has faced challenges in closing its own deals in the past. Florida power company FPL Group Inc scrapped a $12.5 billion takeover of Constellation in 2006 after the merger became embroiled in Maryland state politics.
Recent deals in the industry indicate utilities believe regulators are becoming more receptive to consolidation. Duke Energy (DUK.N) has offered $13.7 billion for Progress Energy (PGN.N), Northeast Utilities (NU.N) is buying NSTAR (NST.N) for $4.2 billion, and AES Corp (AES.N) has bid $3.5 billion for DPL Inc (DPL.N).
The Exelon-Constellation deal must be approved by shareholders of both companies, the Federal Energy Regulatory Commission, the Nuclear Regulatory Commission, state regulators in Maryland, New York and Texas, and other regulatory bodies.
Following completion of the deal, Exelon shareholders will own about 78 percent of the combined company.
Barclays Capital, J.P. Morgan Securities, Evercore Partners and Loop Capital Markets were financial advisers to Exelon.
Morgan Stanley, Goldman Sachs and Credit Suisse advised Constellation.
(Reporting by Michael Erman in New York and Krishna N Das in Bangalore; Editing by Saumyadeb Chakrabarty, Ian Geoghegan and John Wallace)
Link to original article: http://www.reuters.com/article/2011/04/28/us-constellation-exelon-idUSTRE73Q8BS20110428
April 28, 2011 09:49 AM Eastern Daylight Time
Kendall Law Group Investigates Constellation Energy Group, Inc. Merger for Shareholders
DALLAS--(BUSINESS WIRE)--Kendall Law Group, led by former federal judge Joe Kendall, is investigating Constellation Energy Group, Inc. (NYSE: CEG) for shareholders in connection with the proposed acquisition by Exelon Corporation. The national securities firm’s investigation seeks to determine whether Constellation Energy and its Board breached their fiduciary duties by entering into the agreement without properly shopping for a deal that would provide better value for shareholders. If you are a Constellation Energy shareholder and would like additional information about your rights, contact the Kendall Law Group at 877-744-3728 or by email at skendall@kendalllawgroup.com.
On April 28, 2011, the companies announced the definitive merger agreement under which Constellation Energy would be acquired by Exelon, in a transaction valued at approximately $7.9 billion. Under the terms of the agreement, Constellation Energy stockholders will receive 0.93 Exelon shares (NYSE: EXC) for each share of Constellation Energy/CEG common stock held. The value of consideration being offered is worth approximately $38.59 a share, which represents a 12.5 percent premium over Constellation Energy stock's Wednesday closing price of $34.30. The firm’s investigation seeks to determine whether Constellation Energy and its Board undertook a fair process in negotiating the deal.
Kendall Law Group was founded by a former federal judge, includes a former United States Attorney, prosecutors and securities lawyers who are experienced in complex securities litigation. The firm has been counsel in numerous merger and acquisition cases nationwide, including some of the largest transactions in the United States.
Contacts
Kendall Law Group LLP
Scott Kendall, 214-744-3000
877-744-3728 Toll Free
214-744-3015 Facsimile
skendall@kendalllawgroup.com
www.kendalllawgroup.com
Link to original article: http://www.businesswire.com/news/home/20110428006191/en/Kendall-Law-Group-Investigates-Constellation-Energy-Group
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