CHICAGO - Energy provider Exelon is buying Pepco Holdings Inc. for $6.83 billion to create a large electric and gas utility in the Mid-Atlantic region.
The deal will combine Exelon Corp.'s electric and gas utilities BGE, ComEd and PECO with Pepco's Atlantic City Electric, Delmarva Power and its namesake utility.
The combined utility businesses will serve approximately 10 million customers and have a rate base of approximately $26 billion.
Under terms of the deal, Exelon will pay $27.25 per Pepco share, an 18 per cent premium to the company's $23.10 closing price on Tuesday.
Shares of Pepco rose $1.51, or 6.6 per cent, to $24.30 before the opening bell on Wednesday.
Chicago's Exelon will put $100 million into a customer investment fund to be used across the Pepco utilities' service territories as each state public service commission feels is appropriate for customer benefits, such as rate credits, assistance for low income customers and energy efficiency measures.
Exelon President and CEO Chris Crane will serve in those roles for the combined company. Pepco Chairman, President and CEO Joseph Rigby will stay in his positions until the transaction closes. He had announced in January that he plans to retire in the first half of 2015. To help ease the transition, he'll step down as CEO near the end of this year after his successor is chosen.
The deal is expected to significantly add to Exelon's adjusted earnings in the first full year after the acquisition is complete.
Both companies' boards unanimously approved the transaction, which is targeted to close in 2015's second or third quarter. The deal needs approval from Pepco shareholders and regulatory approvals.
Exelon also announced mixed first-quarter results on Wednesday. The company reported adjusted earnings of 62 cents per share on revenue of $7.24 billion. Analysts surveyed by FactSet predicted earnings of 69 cents per share on revenue of $6.56 billion.