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On May 25, Exelon (NYSE: EXC ) and Constellation Energy (NYSE: CEG ) announced that they had filed for a merger approval with the Maryland Public Service Commission. This move comes as no surprise considering Exelon and Constellation Energy had already announced their intention to merge by 2012 in an all-stock transaction. So what does this merger mean for current and future investors?
It's all in the details
According to merger details, Exelon is offering 0.93 share of Exelon common stock in exchange for each share of Constellations' stock. As of April 27, 2011, this will represent an 18.1% premium to the 30-day average closing stock price. Additionally:
- Exelon shareholders will own 78% of the combined company; Constellation shareholders will own 22%.
- Constellation shareholders would receive a value of $38.59 per share, and they would receive a 103% dividend increase.
That sounds pretty good for Exelon and Constellation shareholders, but what effect will the deal have on the company?
Double the power
The two utility companies say that by merging, Exelon (as the joint company will be called) will be the largest competitive integrated energy provider in the United States. Moreover it will:
- Join Exelon's environmentally advantaged generation fleet with Constellation Energy's leading customer-facing business, providing greater growth and benefits to stakeholders.
- Provide regionally diverse, clean power generation.
- Combine superior nuclear operating performance.
If Exelon and Constellation Energy are able to pull of this merger, their combined assets will exceed $72 billion, with revenues of more than $39 billion. It will also make Exelon the No. 1 competitive energy products and supplier by load -- about 165 TWh -- and Exelon will be the No. 1 competitive power generator across 38 states with more than 34 GW of power generation and 226 TWh of expected output.
Great news for Exelon and Constellation Energy, but bad news for competitors American Electric Power (NYSE: AEP ) , FirstEnergy (NYSE: FE ) , Edison International (NYSE: EIX ) , Dominion Resources (NYSE: D ) , and Southern Co. (NYSE: SO ) .
Coming to a home near you
Exelon and Constellation Energy's merger is still in the stage of seeking regulatory approvals, but it looks like it will go through in the end. This looks to be great news for the future of the company and its investors.