Exelon to Purchase PSEG
Exelon Corp. is acquiring Public Service Enterprise Group Inc. in a $12-billion stock deal that would create the nation’s largest power generation company with customers in Illinois, New Jersey and Pennsylvania.
“We will be the company that keeps over 18 million people warm in the winter, and cool in the summer,” John W. Rowe, chairman and chief executive of Exelon, said Monday in announcing the deal that will create Exelon Electric & Gas.
About 1,400 jobs are expected to be cut over the next two years, part of the effort to achieve an estimated half-billion dollars in savings, said Thomas M. O’Flynn, Public Service Enterprise’s chief financial officer. The two companies employ 28,500 people.
The new company would have $79 billion in assets, with $27 billion in annual revenue and $3.2 billion in annual profit, the companies said.
Shares of both companies finished the day higher, despite some concerns that regulatory approval might be an issue for the deal, which is expected to close in 12 to 15 months.
Public Service Enterprise shares surged $3.29, or 7%, to finish at $50.56 on the New York Stock Exchange -- a new 52-week high for the stock.
Exelon shares rose $1.19, or 2.8%, to $43.05 on the NYSE -- also within striking distance of their 52-week high of $43.58.
Under the agreement, each Public Service share will be converted into 1.225 shares of Exelon. The offer values Public Service at $51.28 a share, an 8.5% premium to its closing price of $47.27 on Friday. After the deal, Public Service Enterprise stockholders will own about 32%, or 306 million of Exelon Electric & Gas’ pro-forma shares outstanding, and Exelon shareholders will own about 68%, or 650 million shares.
Chicago-based Exelon and Newark, N.J.-based Public Service Enterprise said both of their boards had unanimously approved the move.
Jeanne Fox, president of the New Jersey Board of Public Utilities, said it was too early to predict what would happen to gas and electric rates if the merger is approved, but said the deal might result in some savings.
Fox said the merger petition would probably be filed in a month or two, and that public hearings would be held. She wants to evaluate reliability and customer service.
The companies said the transaction also would require approval of the Federal Energy Regulatory Commission, the Nuclear Regulatory Commission, the Securities and Exchange Commission and either the Justice Department or the Federal Trade Commission.
The combined company is to be based in Chicago and would serve about 7 million electric users and 2 million natural gas customers.
The new company would be led by Rowe, and its energy trading operations and nuclear headquarters would be located in Pennsylvania. The headquarters of the combined generation company would be based in Newark.
