Exelon Corporation (NYSE: EXC ) announced today that it is acquiring Pepco Holdings (NYSE: POM ) for $6.8 billion in cash. The move will bring Pepco's three regulated utilities (Atlantic City Electric, Delmarva Power, and Pepco) under Exelon's auspices, creating "the leading Mid-Atlantic electric and gas utility," according to the release.
"Exelon and Pepco Holdings have a compelling strategic rationale for merging, given our geographic proximity and similar utility business models," said Exelon President and CEO Chris Crane in a statement today. "Our cultures are an excellent match, with a shared focus on operational excellence, environmental stewardship, customer service and support for the communities we serve."
For Pepco's part, Chairman, President, and CEO Joseph Rigby sees the acquisition as a win-win for all involved. "This combination provides significant benefits for all of our stakeholders, including customers, employees and shareholders...As part of this transaction, Exelon has committed to provide what our customers most want: investments in infrastructure improvements, continuation of our long tradition of philanthropy in our communities and direct customer benefits of $100 million. Our shareholders will benefit from an immediate cash premium, and employees should enjoy even more opportunities as part of a larger company."
Current Pepco Holdings shareholders will receive $27.25 per share, an 18% premium over yesterday's closing price. While both boards have unanimously approved the acquisition, the deal still needs Pepco shareholder buy-in and regulatory approval.
If all goes as planned, the two corporations expect to close the deal in the second or third quarter of 2015.