Boston, MA 05/12/2014 (wallstreetpr) – Pepco Holdings, Inc. (NYSE:POM) the leading energy delivery company in the Mid-Atlantic region has signed an agreement with Exelon Corporation (NYSE:EXC), the leading energy provider in the US headquartered in Chicago. The agreement will combine Exelon’s three electric and gas utilities namely BGE, ComEd and PECO with Pepco Holdings’ electric and gas utilities namely Atlantic City Electric, Delmarva Power and Pepco. The joint company will develop a leading electric and gas utility in Mid-Atlantic region.
Pepco to get $6.9 Billion
Crane will be appointed as the president and CEO of the joint entity. Exelon Corp will pay $6.9 billion to Pepco Holdings, Inc. (NYSE:POM). The approval from the stockholders of Pepco Holdings, the Federal Energy Regulatory Commission and various district and state commissions will be required. The transaction is expected to be completed in the Q2 or Q3 of FY2015.
The financial advisors for Exelon are Barclays, Goldman, Sachs & Co. and Loop Capital Markets. The legal advice is being taken from Kirkland & Ellis LLP. Lazard is providing financial advice and Sullivan & Cromwell LLP and Covington & Burling LLP is providing legal advice to Pepco Holdings.
Win-win deal for both sides
Under the deal, Exelon Corporation (NYSE: EXC) and Pepco Holdings, Inc. (NYSE:POM)will work for the improvement of service reliability. Pepco Holdings service reliability for Atlantic City Electric, Delmarva Power and Pepco customers will be supported by a strong, reliable, current Exelon utilities. The deal would ensure that regulated operations improve safety of pay-out dividends and set the stage for future growth. Exelon will spend $21 billion for upgrading and expanding its regulated asset base in the next five years that will force dividend growth. The combination will provide benefits to shareholders, customers and employees of Pepco Holdings. Exelon will give $100 million for a Customer Investment Fund that can be used by the Pepco Holdings utilities’ service territories. The utility business will provide services to 10 million customers. The expansion will create balanced earnings for Exelon as power prices recover.
