Chicago-based energy producer and distributor Exelon Corp. (NYSE: EXC) has agreed to buy the parent company of mid-Atlantic regional electricity and gas provider Pepco for approximately $6.8 billion in cash, or $27.25 per share.
The companies expect the transaction to close in either the second or third quarter of 2015 and increase Exelon’s earnings per share in the first full year after closing, Exelon and Pepco said Wednesday.
Both sets of boards of directors have approved the deal, which is subject to approval by the Federal Energy Regulatory Commission, the District of Columbia Public Service Commission, the Delaware Public Service Commission, the Maryland Public Service Commission and the New Jersey Board of Public Utilities.
Chris Crane, Exelon president and CEO, cited Pepco’s “geographic proximity and similar utility business models” as among Exelon’s reasons to make the acquisition.
Crane will serve as president and CEO of the combined company and Joseph Rigby, the retiring chief executive of Pepco Holdings, will remain in his current role until the deal closes.
Pepco shareholders will receive a premium of around 24 percent through the deal, which Exelon will have support for through a $7.2 billion bridge facility with Barclays and Goldman Sachs.
Exelon says its financing plan for the deal to include equity issuance, long-term debt and corporate cash.
The combined utility will include Exelon’s BGE, ComEd and PECO utilities and Pepco Holdings’ Atlantic City Electric, Delmarva Power and Pepco utilities.
Upon the deal’s closure Exelon will allocate $100 million to a customer investment fund across Pepco Holdings’ utilities for items such as rate credits, assistance for low-income customers and energy efficiency measures.