Constellation Exelon combine companies

Constellation Energy and Exelon Corp. have signed an agreement to combine Exelon’s generation fleet and Constellation’s customer-facing business in a stock-for-stock transaction. The new company will use the Exelon name and be headquartered in Chicago. The enterprise value of the new company is $52 billion.

Exelon will own approximately 78 percent of the combined company and Constellation 22 percent on a fully diluted basis when the merger is completed. Under the agreement, Constellation shareholders will receive 0.930 shares of Exelon common stock in exchange for each share of Constellation common stock. Based on Exelon’s closing share price on April 27, Constellation shareholders would receive a value of $38.59 per share, or $7.9 billion in total equity value. That equals an 18.1 percent premium to the 30-day average closing stock prices of both companies as of April 27.

Additionally, Exelon’s power marketing business and Constellation’s retail and wholesale business will be consolidated under the Constellation brand and be headquartered in Baltimore. Both companies’ renewable energy businesses will also be headquartered in Baltimore and the three utilities within the new Exelon – BGE, ComEd and PECO – will remain standalone companies.

Current Constellation chairman, president and CEO Mayo Shattuck III will be executive chairman of the combined company, while Exelon president and COO Christopher Crane will become president and CEO. Exelon chairman and CEO John Rowe will retire upon closing of the transaction, which is expected in early 2012. Stockholders from both companies must first approve the deal.

The new company will serve 38 states, the District of Columbia and the Canadian provinces of Alberta and Ontario and will have nearly 19,000 MW of nuclear energy.

Barclays Capital, JP Morgan Securities, Evercore Partners and Loop Capital Markets served as financial advisors to Exelon. Morgan Stanley & Co. Inc., Goldman, Sachs & Co. and Credit Suisse Securities LLC served as financial advisors to Constellation.

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