For Immediate Release
and WASHINGTON, D.C. (April 30, 2014)
- Exelon Corporation (NYSE: EXC) and Pepco Holdings Inc. (NYSE: POM) today
announced that they have signed a definitive agreement to combine the two
companies in an all-cash transaction. The agreement, which has been unanimously
approved by both companies' boards of directors, brings together Exelon's three
top-performing electric and gas utilities - BGE, ComEd and PECO - and Pepco
Holdings' electric and gas utilities - Atlantic City Electric, Delmarva Power
and Pepco - to create the leading Mid-Atlantic electric and gas utility.
combined utility businesses will serve approximately 10 million customers and
have a rate base of approximately $26 billion. The transaction will further
expand Exelon's regulated holdings, ensuring a balanced earnings mix as power
President and CEO Chris Crane said, "Exelon and Pepco Holdings have a
compelling strategic rationale for merging, given our geographic proximity and
similar utility business models. Our cultures are an excellent match, with a
shared focus on operational excellence, environmental stewardship, customer
service and support for the communities we serve."
Holdings Chairman, President and CEO Joseph M. Rigby, said, "This combination
provides significant benefits for all of our stakeholders, including customers,
employees and shareholders. Exelon is one of the most respected energy
companies in the country, and it is committed to building on the progress our
team has made over the last few years to improve system reliability and
customer satisfaction. As part of this transaction, Exelon has committed to
provide what our customers most want: investments in infrastructure improvements,
continuation of our long tradition of philanthropy in our communities and
direct customer benefits of $100 million. Our shareholders will benefit from an
immediate cash premium, and employees should enjoy even more opportunities as
part of a larger company."
added that being part of a family of large urban utilities with distinguished
emergency response capabilities will be of enormous value to the Pepco Holdings
utilities and their customers during major storms.
part of the acquisition, Exelon and Pepco Holdings have committed to build on
the significant improvements to service reliability that Pepco Holdings has
already achieved for Atlantic City Electric, Delmarva Power and Pepco customers.
commitment is backed by the strong reliability performance of the current
Exelon utilities. ComEd and PECO are
delivering first-quartile performance, and BGE's reliability metrics have risen
to their best-ever levels since BGE joined Exelon in 2012 and are just shy of
addition to reliability improvements, upon completion of the transaction,
Exelon will provide an aggregate $100 million - equivalent to approximately $50
per customer - for a Customer Investment Fund to be utilized across the Pepco
Holdings utilities' service territories as each state public service commission
deems appropriate for customer benefits, such as rate credits, assistance for
low income customers and energy efficiency measures.
has also pledged to maintain charitable contributions in the Pepco Holdings
service territories at Pepco Holdings' highest-ever level for at least a decade,
a total commitment of $50 million.
The all-cash transaction consideration of $27.25 per share represents a 24.7
percent premium to Pepco Holdings' closing price of $21.85 on April 25, 2014, and
a 28.2 percent premium to the volume-weighted average share price over the last
20 trading days.
acquisition is anticipated to be significantly accretive to Exelon's adjusted
earnings in the first full year after closing.
transaction is supported by a fully committed $7.2 billion bridge facility with
Barclays and Goldman Sachs. Exelon expects the permanent financing plan to
include a combination of Exelon equity issuance, long-term debt and corporate
cash. The timing of the permanent financing is subject to a number of factors,
including but not limited to market conditions.
will remain president and CEO of the combined company. Rigby, who previously
announced his planned retirement, will remain in his current roles with Pepco
Holdings until the closing of the transaction.
is headquartered in Chicago. As is the case with BGE in Baltimore, ComEd in
Chicago and PECO in Philadelphia, Pepco Holdings utilities will retain their regional
headquarters in May's Landing, N.J. (Atlantic City Electric), Newark, Del. (Delmarva
Power), and Washington, D.C. (Pepco). All utilities will remain focused on
safety, customer service, reliability and infrastructure investment within
their jurisdictions, while they work together to share best practices to
continually improve performance for customers.
transaction requires the approval of the stockholders of Pepco Holdings.
Completion of the transaction is also conditioned upon approval by the Federal
Energy Regulatory Commission, the District of Columbia Public Service
Commission and several state commissions including the Delaware Public Service
Commission, the Maryland Public Service Commission and the New Jersey Board of
Public Utilities. The transaction is also subject to the notification and
reporting requirements under the Hart-Scott-Rodino Act and other customary
companies anticipate closing in the second or third quarter of 2015.
Goldman, Sachs & Co. and Loop Capital Markets are serving as financial
advisors and Kirkland & Ellis LLP is serving as legal counsel to Exelon.
Lazard provided a fairness opinion and served as lead financial advisor to
Pepco Holdings, Morgan Stanley provided a fairness opinion to the Pepco
Holdings Board of Directors and Sullivan & Cromwell LLP and Covington &
Burling LLP served as legal counsel to Pepco Holdings.
Rigby will discuss the transaction on a one-hour conference call with the
financial community during the timeframe for Exelon's scheduled earnings call:
11 a.m. EDT (10 a.m. CDT) Wednesday, April 30.
call-in number in the U.S. and Canada is 800-690-3108, and the international
call-in number is 973-935-8753. If requested, the conference ID number is 14743663. Media
representatives are invited to participate on a listen-only basis. The
call will be webcast and archived on Exelon's and Pepco's websites: www.exeloncorp.com and www.pepcoholdings.com (select the Investors
page of either site).
replays will be available starting two hours after the call ends and until May
14, 2014. The U.S. and Canada number for replays is 800-585-8367, and the
international number is 404-537-3406. The conference ID number is 14743663.
live audio webcast on the Investor Relations page of Exelon's website (www.exeloncorp.com) will also be
available. It will be archived and available for replay two hours after the
conference call ends.
Corporation (NYSE: EXC) is the nation's leading competitive energy provider,
with 2013 revenues of approximately $24.9 billion. Headquartered in Chicago,
Exelon has operations and business activities in 47 states, the District of
Columbia and Canada. Exelon is one of the largest competitive U.S. power
generators, with more than 35,000 megawatts of owned capacity comprising one of
the nation's cleanest and lowest-cost power generation fleets. The company's
Constellation business unit provides energy products and services to
approximately 100,000 business and public sector customers and approximately 1
million residential customers. Exelon's utilities deliver electricity and
natural gas to more than 6.6 million customers in central Maryland (BGE),
northern Illinois (ComEd) and southeastern Pennsylvania (PECO). Follow Exelon
on Twitter @Exelon.
Pepco Holdings Inc. is one of
the largest energy delivery companies in the Mid-Atlantic region, serving about
2 million customers in Delaware, the District of Columbia, Maryland and New
Jersey. PHI subsidiaries Pepco, Delmarva Power and Atlantic City Electric
provide regulated electricity service; Delmarva Power also provides natural gas
service. PHI also provides energy efficiency and renewable energy services
through Pepco Energy Services. For more information, visit online: www.pepcoholdings.com.
for the historical information contained herein, certain of the matters
discussed in this communication constitute "forward-looking statements" within
the meaning of the Securities Act of 1933 and the Securities Exchange Act of
1934, both as amended by the Private Securities Litigation Reform Act of 1995.
Words such as "may," "might," "will," "should," "could," "anticipate,"
"estimate," "expect," "predict," "project," "future", "potential," "intend,"
"seek to," "plan," "assume," "believe," "target," "forecast," "goal,"
"objective," "continue" or the negative of such terms or other variations
thereof and words and terms of similar substance used in connection with any
discussion of future plans, actions, or events identify forward-looking
statements. These forward-looking statements include, but are not limited to,
statements regarding benefits of the proposed merger, integration plans and
expected synergies, the expected timing of completion of the transaction,
anticipated future financial and operating performance and results, including
estimates for growth. These statements are based on the current expectations of
management of Exelon Corporation (Exelon) and Pepco Holdings, Inc. (PHI), as
applicable. There are a number of risks and uncertainties that could cause
actual results to differ materially from the forward-looking statements
included in this communication. For example, (1) PHI may be unable to
obtain shareholder approval required for the merger; (2) the companies may
be unable to obtain regulatory approvals required for the merger, or required
regulatory approvals may delay the merger or cause the companies to abandon the
merger; (3) conditions to the closing of the merger may not be satisfied;
(4) an unsolicited offer of another company to acquire assets or capital
stock of Exelon or PHI could interfere with the merger; (5) problems may
arise in successfully integrating the businesses of the companies, which may
result in the combined company not operating as effectively and efficiently as
expected; (6) the combined company may be unable to achieve cost-cutting
synergies or it may take longer than expected to achieve those synergies;
(7) the merger may involve unexpected costs, unexpected liabilities or
unexpected delays, or the effects of purchase accounting may be different from
the companies' expectations; (8) the credit ratings of the combined
company or its subsidiaries may be different from what the companies expect;
(9) the businesses of the companies may suffer as a result of uncertainty
surrounding the merger; (10) the companies
may not realize the values expected to be obtained for properties expected or
required to be sold; (11) the industry may be subject to future regulatory
or legislative actions that could adversely affect the companies; and
(12) the companies may be adversely affected by other economic, business,
and/or competitive factors. Other unknown or unpredictable factors could also
have material adverse effects on future results, performance or achievements of
the combined company. Therefore, forward-looking statements are not guarantees
or assurances of future performance, and actual results could differ materially
from those indicated by the forward-looking statements. Discussions of some of
these other important factors and assumptions are contained in Exelon's and
PHI's respective filings with the Securities and Exchange Commission (SEC), and
available at the SEC's website at www.sec.gov, including: (1) Exelon's
2013 Annual Report on Form 10-K in (a) ITEM 1A. Risk Factors,
(b) ITEM 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations and (c) ITEM 8. Financial
Statements and Supplementary Data: Note 22; and (2) PHI's 2013 Annual
Report on Form 10-K in (a) ITEM 1A. Risk Factors, (b) ITEM 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations and
(c) ITEM 8. Financial Statements and Supplementary Data: Note 15. These risks as
well as other risks associated with the proposed merger will be more fully
discussed in the proxy statement that PHI intends to file with the SEC and mail
to its stockholders in connection with the proposed merger.] In light of these
risks, uncertainties, assumptions and factors, the forward-looking events
discussed in this communication may not occur. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as
of the date of this communication. Neither Exelon nor PHI undertakes any
obligation to publicly release any revision to its forward-looking statements
to reflect events or circumstances after the date of this communication. New factors emerge from time to time, and it is not possible
for Exelon or PHI to predict all such factors. Furthermore, it may not be
possible to assess the impact of any such factor on Exelon's or PHI's
respective businesses or the extent to which any factor, or combination of
factors, may cause results to differ materially from those contained in any
forward-looking statement. Any specific factors that may be provided should not
be construed as exhaustive.
This communication does not constitute a
solicitation of any vote or approval. PHI intends to file with the SEC and mail to its
stockholders a proxy statement in connection with the proposed merger
PHI URGES INVESTORS AND SECURITY HOLDERS TO READ THE PROXY STATEMENT AND
ANY OTHER RELEVANT DOCUMENTS WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION about Exelon, PHI and the proposed merger.
Investors and security holders will be able to obtain these materials (when
they are available) and other documents filed with the SEC free of charge at
the SEC's website, www.sec.gov. In addition, a copy of PHI's proxy statement
(when it becomes available) may be obtained free of charge from Pepco Holdings,
Inc., Corporate Secretary, 701 Ninth Street, N.W., Room 1300, Washington, D.C.
20068. Investors and security holders may also read and copy any reports,
statements and other information filed by Exelon or PHI with the SEC, at the
SEC public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please
call the SEC at 1-800-SEC-0330 or visit the SEC's website for further
information on its public reference room.
Exelon, PHI, and their respective directors,
executive officers and certain other members of management and employees may be
deemed to be participants in the solicitation of proxies in respect of the
proposed transaction. Information regarding Exelon's directors and executive
officers is available in its proxy statement filed with the SEC on April 2,
2014, in connection with its 2014 annual meeting of stockholders, and
information regarding PHI's directors and executive officers is available in
its proxy statement filed with the SEC on March 25, 2014, in connection with
its 2014 annual meeting of stockholders. Other information regarding the
participants in the proxy solicitation and a description of their direct and
indirect interests, by security holdings or otherwise, will be contained in the
proxy statement and other relevant materials to be filed with the SEC when they
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