Boston, MA 05/22/2014 (wallstreetpr) – Pepco Holdings, Inc. (NYSE:POM) was acquired by Exelon Corp., the largest nuclear operator of the U.S., in a deal worth $6.8 billion in cash. Exelon Corp. acquired Pepco Holdings so that it could proceed on the project of creating the biggest natural gas and electric utility in Mid-Atlantic region.
Benefits Of The Deal To Exelon Corp
In the year 2013, it was found that the overall acquisitions in the U.S. power utilities were worth $14.9 billion. Exelon Corp is bound to derive benefit from the acquisition because this will help in bringing down the costs, expand its business in Eastern U.S. region and attract 2 million customers of Chicago. It is important to note that Exelon is an owner of various other utilities in Baltimore and Philadelphia. With the deal, Exelon is expected to save $80 million annually.
A New York based utility analyst, Paul Patterson of Glenrock Associates LLC, in this context, explained that the deal would mitigate the exposure of Exelon to the market of wholesale merchants. The properties such as Pepco Holdings, Inc. (NYSE:POM) are very regulated and attractive and; therefore, there aren’t much properties of this kind available.
Statement From The Leaders On The Deal
The CEO of Exelon Corp, Chris Crane said that Pepco Holdings, as well as Exelon, had a compelling strategic rationale for this merger because of the similar utility business models as well as geographic proximity.
Prospects Of The Combined Company
After the deal, the combined company is expected to serve around 10 million customers. Additionally, the new company will have the rate base of approximately $26 billion. It is expected that the new company gains the required regulatory approvals soon.
It is worth noticing that the electricity sales in the U.S. have considerably diminished in past four years, as per the report of the U.S. Energy Information Administration.
