Exelon Corporation
(
EXC
) and
Constellation Energy Group Inc.
(
CEG
) reached an agreement with Electricite de France or EDF, pursuant
to which EDF would withdraw its opposition to the
Exelon-Constellation merger. The terms address Constellation Energy
Nuclear Group, a joint venture between Constellation and EDF that
owns and operates three nuclear facilities with five generating
units in Maryland and New York.
Further, Exelon said this merger would combine its
environmentally advantaged generation fleet with Constellation
Energy's customer-facing businesses. No payment was made by either
party with respect to this agreement.
Earlier, on April 28, 2011, Exelon entered into a definite
agreement to acquire Constellation Energy, for about $7.9 billion.
The exchange ratio agreed upon represents an 18.1% premium to the
30-day average closing stock prices of Exelon and Constellation as
of April 27, 2011. Following the completion of the merger, Exelon
shareholders will have 78% ownership of the combined company, while
the rest will belong to Constellation shareholders. The companies
expect to close the merger by early 2012.
Nuclear power plants are the major source of power generation
for Exelon. As the deal was finally chalked out, Exelon will have
access to Constellation's nuclear power plants in New York and
Maryland. This will come as a big boost to its generation
capacity.
This merger will create the nation's number one competitive
energy products and services supplier by load and customers as well
as the biggest competitive power generator having the largest
nuclear fleet in the U.S. The consolidated entity will also produce
power at much lower costs, helping them to jointly work on fuel
innovation, increase efficiency and provide better options and
rates to customers.
The Exelon-Constellation merger has received approval by the
Department of Justice, the New York Public Service Commission, the
Public Utility Commission of Texas and the shareholders of Exelon
and Constellation. However, approval is pending from the Federal
Energy Regulatory Commission, the Nuclear Regulatory Commission and
the Maryland Public Service Commission.
Baltimore based Constellation Energy is a supplier of power,
natural gas and energy products and services for homes and
businesses across the continental United States.
Despite obvious positives to be reaped from such a
consolidation, the deal came after both the companies showed a
dubious track record of failing to acquire or be acquired by other
companies. On a few occasions, Exelon has made unsuccessful
attempts to clinch acquisitions. The target companies, for
instance, were
NRG Energy Inc.
(
NRG
) in 2008,
Public Service Enterprise Group Inc.
(
PEG
) in 2004 and Illinois Power Co. in 2003.
Constellation Energy came close to be acquired twice before both
the deals fell through.
NextEra Energy Inc.
's (
NEE
) attempt to buy Constellation was thwarted in 2005 by the
interference of state officials. Another deal to be acquired by
Berkshire Hathaway failed in 2008.
Exelon Corporation currently retains a Zacks #3 Rank (short-term
Hold rating). We maintain a longer-term Neutral recommendation on
Exelon.
Based in Chicago, Illinois, Exelon Corporation, a utility
services holding company, engages in the generation, transmission,
distribution and sale of electricity to residential, commercial,
industrial and wholesale customers.
CONSTELLATN EGY (
CEG
): Free Stock Analysis Report
EXELON CORP (
EXC
): Free Stock Analysis Report
NEXTERA ENERGY (
NEE
): Free Stock Analysis Report
NRG ENERGY INC (
NRG
): Free Stock Analysis Report
PUBLIC SV ENTRP (
PEG
): Free Stock Analysis Report
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