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The all-stock transaction values Baltimore-based Constellation at $38.59 a share, marking a 12.5% premium on the company’s closing price on Wednesday.
The deal creates an energy giant with a market cap of $34 billion and will consist of three standalone organizations: BGE, ComEd and PECO.
The parent company will keep the Exelon name and remain headquartered in Chicago. Exelon’s power marketing business and Constellation’s retail and wholesale business will merge under the Constellation brand and be based in Baltimore.
“This merger creates the number one competitive energy provider with one of the industry’s cleanest and lowest-cost power generation fleets and one of the largest commercial, industrial and residential customer bases in the United States,” Exelon CEO John Rowe said in a statement.
The Exelon/Constellation marriage comes in the wake of a string of deals in the space, including Duke Energy’s (DUK) $13.7 billion buyout of Progress Energy (PGN) and Northeast Utilities’ (NU) $4.2 billion takeover of NSTAR (NST).
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By joining forces, Exelon and Constellation will become the largest competitive energy products and services supplier by load and customers and the No. 2 residential electricity and gas distribution company with 6.6 million customers.
Exelon expects the acquisition to increase its earnings by more than 5% in 2013 after having no impact on its non-GAAP profits in 2012.
“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,” Constellation CEO Mayo Shattuck III said in a statement.
Shattuck will become the new company’s executive chairman, while Christopher Crane, Exelon’s president and chief operating officer, will be its president and CEO. Rowe plans to retire when the deal closes.
The new company’s board will consist of 12 members from Exelon and four from Constellation.
Constellation and Exelon said they anticipate the deal closing in early 2012 after receiving approval from shareholders and regulators, including the Federal Energy Regulatory Commission and Nuclear Regulatory Commission.
Shares of Constellation jumped 6.41% to $36.50 ahead of Thursday’s open, while Exelon gained 0.99% to $41.90.