By Michael Calia
Exelon Corp. agreed to buy rival electricity and gas utility
company Pepco Holdings Inc. in an all-cash deal worth about $6.8
billion.
The per-share price of $27.25 a share represents a 20% premium
over Pepco's closing price Tuesday of $22.79.
The deal would create a mid-Atlantic utility serving about 10
million customers from D.C. up to Philadelphia and southern New
Jersey, with a rate base of about $26 billion.
Exelon said it expects the deal to add significantly 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.
Pepco shares, up 19% so far this year through Tuesday's close,
rose 17% to $26.76 in premarket trading, while Exelon, up 32% this
year, was inactive.
Exelon is financing the deal 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.
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 per-share 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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