The Virginia State Corporation Commission (SCC) yesterday
approved the proposed merger of Exelon Corporation (NYSE: EXC) and
Pepco Holdings Inc. (NYSE: POM). The companies announced their
proposed merger on April 30.
The combination of the companies will bring together Exelon’s
three electric and gas utilities – BGE, ComEd and PECO – and Pepco
Holdings’ (PHI’s) three electric and gas utilities – Atlantic City
Electric, Delmarva Power and Pepco – to create the leading
mid-Atlantic electric and gas utility.
The transaction required approval by the SCC because PHI’s Pepco
and Delmarva Power utilities previously served distribution
customers in Virginia and still own a small amount of transmission
infrastructure in the state.
“We are pleased that the SCC has approved our merger with PHI,”
said Chris Crane, Exelon president and CEO. “This approval brings
us another step closer to completing this transaction.”
“This approval will allow us to proceed towards uniting our two
companies,” said Joseph M. Rigby, PHI chairman, president and CEO.
“We look forward to bringing substantial benefits to our customers
and the communities we serve through this merger.”
Transaction-related filings have been made with and are subject
to the approval of the Federal Energy Regulatory Commission,
Delaware Public Service Commission, Public Service Commission of
the District of Columbia, New Jersey Board of Public Utilities and
Maryland Public Service Commission. The transaction is also subject
to the notification and reporting requirements under the
Hart-Scott-Rodino Act and other customary closing conditions.
The transaction was also approved by PHI stockholders on Sept.
23, 2014. The companies anticipate completing the merger in the
second or third quarter of 2015.
PHI customers will benefit from a $100 million customer benefit
fund that Exelon is establishing that public service commissions in
PHI service territories could use for customer benefits such as
rate credits, assistance programs or energy efficiency. Exelon also
has committed $50 million over the next 10 years to maintain
charitable contributions in the areas served by the PHI
utilities.
Exelon also has committed to build on reliability improvements
that are already underway at the PHI utilities with new, more
stringent targets in the District of Columbia, Maryland, Delaware
and New Jersey. Exelon has agreed to financial penalties if the
targets are not met by 2020. Exelon also will honor PHI’s
bargaining unit agreements. PHI this summer successfully negotiated
contract extensions with all four of the unions representing its
utility employees.
These proposed merger commitments are anticipated to result in
substantial economic benefits for customers and communities served
by the PHI utilities, as detailed in an economic modeling analysis.
Combined with reliability improvement projects already announced by
PHI and underway, the merger commitments are expected to produce
approximately 11,000 to 14,000 new jobs and between $1.0 billion to
$1.3 billion in benefits to the economies of Delaware, Maryland,
New Jersey and Washington, D.C., within six years after the merger
closes.
About Exelon Corporation
Exelon Corporation (NYSE: EXC) is the nation’s leading
competitive energy provider, with 2013 revenues of approximately
$24.9 billion. Headquartered in Chicago, Exelon does business in 48
states, the District of Columbia and Canada. Exelon is one of the
largest competitive U.S. power generators, with more than 35,000
megawatts of owned capacity comprising one of the nation’s cleanest
and lowest-cost power generation fleets. The company’s
Constellation business unit provides energy products and services
to approximately 100,000 business and public sector customers and
more than 1 million residential customers. Exelon’s utilities
deliver electricity and natural gas to more than 7.8 million
customers in central Maryland (BGE), northern Illinois (ComEd) and
southeastern Pennsylvania (PECO). Follow Exelon on Twitter
@Exelon.
About Pepco Holdings Inc.
Pepco Holdings Inc. is one of the largest energy delivery
companies in the Mid-Atlantic region, serving about 2 million
customers in Delaware, the District of Columbia, Maryland and New
Jersey. PHI subsidiaries Pepco, Delmarva Power and Atlantic City
Electric provide regulated electricity service; Delmarva Power also
provides natural gas service. PHI also provides energy efficiency
and renewable energy services through Pepco Energy Services. For
more information, visit online: www.pepcoholdings.com.
Cautionary Statements Regarding Forward-Looking
Information
Except for the historical information contained herein, certain
of the matters discussed in this communication constitute
“forward-looking statements” within the meaning of the Securities
Act of 1933 and the Securities Exchange Act of 1934, both as
amended by the Private Securities Litigation Reform Act of 1995.
Words such as “may,” “might,” “will,” “should,” “could,”
“anticipate,” “estimate,” “expect,” “predict,” “project,” “future”,
“potential,” “intend,” “seek to,” “plan,” “assume,” “believe,”
“target,” “forecast,” “goal,” “objective,” “continue” or the
negative of such terms or other variations thereof and words and
terms of similar substance used in connection with any discussion
of future plans, actions, or events identify forward-looking
statements. These forward-looking statements include, but are not
limited to, statements regarding benefits of the proposed merger,
integration plans and expected synergies, the expected timing of
completion of the transaction, anticipated future financial and
operating performance and results, including estimates for growth.
These statements are based on the current expectations of
management of Exelon Corporation (Exelon) and Pepco Holdings, Inc.
(PHI), as applicable. There are a number of risks and uncertainties
that could cause actual results to differ materially from the
forward-looking statements included in this communication. For
example, (1) PHI may be unable to obtain shareholder approval
required for the merger; (2) the companies may be unable to
obtain regulatory approvals required for the merger, or required
regulatory approvals may delay the merger or cause the companies to
abandon the merger; (3) conditions to the closing of the
merger may not be satisfied; (4) an unsolicited offer of
another company to acquire assets or capital stock of Exelon or PHI
could interfere with the merger; (5) problems may arise in
successfully integrating the businesses of the companies, which may
result in the combined company not operating as effectively and
efficiently as expected; (6) the combined company may be
unable to achieve cost-cutting synergies or it may take longer than
expected to achieve those synergies; (7) the merger may
involve unexpected costs, unexpected liabilities or unexpected
delays, or the effects of purchase accounting may be different from
the companies’ expectations; (8) the credit ratings of the
combined company or its subsidiaries may be different from what the
companies expect; (9) the businesses of the companies may
suffer as a result of uncertainty surrounding the merger;
(10) the companies may not realize the values expected to be
obtained for properties expected or required to be sold;
(11) the industry may be subject to future regulatory or
legislative actions that could adversely affect the companies; and
(12) the companies may be adversely affected by other
economic, business, and/or competitive factors. Other unknown or
unpredictable factors could also have material adverse effects on
future results, performance or achievements of the combined
company. Therefore, forward-looking statements are not guarantees
or assurances of future performance, and actual results could
differ materially from those indicated by the forward-looking
statements. Discussions of some of these other important factors
and assumptions are contained in Exelon’s and PHI’s respective
filings with the Securities and Exchange Commission (SEC), and
available at the SEC’s website at www.sec.gov, including: (1)
Exelon’s 2013 Annual Report on Form 10-K in (a) ITEM 1A.
Risk Factors, (b) ITEM 7. Management’s Discussion and
Analysis of Financial Condition and Results of Operations and
(c) ITEM 8. Financial Statements and Supplementary Data:
Note 22; (2) Exelon’s Second Quarter 2014 Quarterly Report on Form
10-Q in (a) Part II, Other Information, ITEM 1A. Risk Factors; (b)
Part 1, Financial Information, ITEM 2. Management’s Discussion and
Analysis of Financial Condition and Results of Operations and (c)
Part I, Financial Information, ITEM 1. Financial Statements: Note
15; (3) the definitive proxy statement that PHI filed with the SEC
on August 12, 2014 and mailed to its stockholders in connection
with the proposed merger; (4) PHI’s Current Report on Form 8-K
filed with the SEC on September 12, 2014, which provides
supplemental disclosures to the definitive proxy statement; (5)
PHI’s 2013 Annual Report on Form 10-K in (a) ITEM 1A. Risk Factors,
(b) ITEM 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations and (c) ITEM 8. Financial
Statements and Supplementary Data: Note 15; and (6) PHI’s Second
Quarter 2014 Quarterly Report on Form 10-Q in (a) PART I, ITEM 1.
Financial Statements, (b) PART I, ITEM 2. Management’s Discussion
and Analysis of Financial Condition and Results of Operations and
(c) PART II, ITEM 1A. Risk Factors. In light of these risks,
uncertainties, assumptions and factors, the forward-looking events
discussed in this communication may not occur. Readers are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this communication.
Neither Exelon nor PHI undertakes any obligation to publicly
release any revision to its forward-looking statements to reflect
events or circumstances after the date of this communication. New
factors emerge from time to time, and it is not possible for Exelon
or PHI to predict all such factors. Furthermore, it may not be
possible to assess the impact of any such factor on Exelon’s or
PHI’s respective businesses or the extent to which any factor, or
combination of factors, may cause results to differ materially from
those contained in any forward-looking statement. Any specific
factors that may be provided should not be construed as
exhaustive.
ExelonJudy Rader312-394-7417orPepco HoldingsCourtney
Nogas202-872-2680
Exelon (NYSE:EXC)
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