December must be the month for mega-utility mergers to be announced. Almost a year ago to the day, Exelon
The deal, valued at $11 billion, will convert each Constellation share immediately prior to the merger into 1.444 shares at the time of the merger. According to both companies, this will represent a premium to Constellation shareholders of approximately 15%.
Approximately half of the power generated by Constellation is through nuclear and a third of it through coal. The combined company would be the third-largest operator of nuclear power plants behind Exelon and Entergy
In reality, it's been a pretty busy year for energy-related mergers. Duke Energy
Energy trading, or what is termed merchant energy, resells energy on the open market, typically during peak demand periods. For a while, the term "merchant energy" was a scarlet letter for companies. Enron's collapse, allegations of manipulation of California's energy market, and a host of corporate credit downgrades caused many companies to slash their speculative trading operations. That's apparently of little concern these days, and the FPL-Constellation "merger of equals" will seek to dominate that market.
It's estimated that the two companies will have a combined market cap of $28 billion on revenues of $27 billion. With all of their facilities, they will have $57 billion in combined assets that can service more than 40 million homes and business, giving a warm glow to December's holidays.
Light up with these related Foolish articles:
- Exelon Leads Megawatt Merger
- Duke's Less Than Princely Results
- Berkshire's Fishing Expedition Pays Off
Both Duke Energy and Constellation Energy are Motley Fool Income Investor selections.
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