Boston, MA 05/01/2014 (wallstreetpr) – Pepco Holdings, Inc. (NYSE:POM) jumped to a record level of over 17% on Wednesday after the company made a joint announcement with Exelon Corporation (NYSE:EXC) about its definitive agreement.
Merger Of Gas And Electric Utilities
Pepco Holdings, Inc. (NYSE:POM) and Exelon Corporation (NYSE:EXC) together announced that the boards of directors of the two companies have unanimously consented to the amalgamation of them in an all-cash deal.About the financial aspect, Exelon will buy Pepco Holdings for $27.25 per share, which denotes 24.7% premium to the April 25, 2014 closing price of Pepco Holdings. Moreover, as per the agreement, Exelon’s top three performing electric and gas utilities, namely BGE, ComEd and PECO will combine with Pepco’s electric and gas utilities, namely Atlantic City Electric, Pepco and Delmarva Power to form a leading mid-Atlantic electric and gas utility.
Promises For Customers
Through combining the utility businesses, it will be able to serve nearly 10 million customers and will have a base rate of nearly $26 billion. The deal will further enhance Exelon’s regulated holdings and will assure a balanced earnings mix on recovery of power prices. In addition to this, as per the acquisition, both Pepco Holdings and Exelon Corporation (NYSE:EXC) have pledged to keep improving service reliability that Pepco Holdings, Inc. (NYSE:POM) has already attained for gas and energy utility customers. The commitment finds its support from the solid reliability performance of the present Exelon utilities.
Apart from stronger reliability commitments, Exelon will also provide an average $50 per customer or $100 million towards the Customer Investment Fund, once the transaction is completed. The funds are to be utilized across the service territories of Pepco Holdings utilities in ways that the respective state public service commission finds appropriate. Also, Exelon Corporation (NYSE:EXC) has pledged $50 million for charitable contributions in the Pepco Holdings.
Barclays, Goldman, Sachs & Co. and Loop Capital Markets are acting as financial advisors to Exelon for carrying out the transaction.
