Exelon Corp. reached a deal to buy Pepco Holdings Inc. in an
all-cash deal for $27.25 a share, the electricity and gas utility
companies said Wednesday.
The price represents a 20% premium over Pepco's closing price
Tuesday of $22.79.
Exelon is financing the deal--worth about $6.83 billion--through
a $7.2 billion bridge facility with Barclays and Goldman Sachs,
with the permanent financing plan to include equity issuance,
long-term debt and corporate cash.
The companies said the combined utility will serve about 10
million customers across the Mid-Atlantic region--from the D.C.
area up to Philadelphia and southern New Jersey--with a rate base
of about $26 billion.
Exelon said it expects the deal to be "significantly accretive"
to its adjusted earnings in the first full year after it closes.
The companies said they expect the acquisition to close in the
second or third quarter of 2015.
Exelon Chief Executive Chris Crane will lead the combined
company. Joseph M. Rigby, who had previously announced his
retirement, will stay on as CEO of Pepco until the deal closes.
Also Wednesday, Exelon said it swung to a first-quarter profit,
as adjusted earnings missed expectations and revenue easily topped
views.
The company posted a profit of $90 million, or 10 cents a share,
compared with a loss of $4 million, or a penny a share, a year
earlier. Excluding the impact of hedging activities and other
items, adjusted earnings fell to 62 cents from 70 cents.
Revenue improved 19% to $7.24 billion.
Analysts polled by Thomson Reuters forecast per-share earnings
of 69 cents and revenue of $6.31 billion.
Shares of both companies were inactive in premarket trading.
Pepco shares were up 19% so far this year at $22.79 through
Tuesday's close, while Exelon, which closed at $36.18 Tuesday, is
up 32% so far this year.
Write to Michael Calia at michael.calia@wsj.com
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