Exelon Gains Maryland’s Approval for Constellation Takeover

Exelon Corp. (EXC) won conditional approval from Maryland regulators for its takeover of Constellation Energy Group Inc. (CEG), leaving one regulatory hurdle to the $7.36 billion merger announced nine months ago.

The five-member Public Service Commission voted to set 40 conditions for approving the deal, including a $113.5 million fund to assist customers, more renewable-energy investments and a $100 customer rebate, according to a statement today.

The terms incorporate more than $1 billion in investments that Chicago-based Exelon pledged in December as part of a settlement with Maryland Governor Martin O’Malley, quadrupling the $250 million package of economic incentives Exelon proposed when the merger was announced.

“We accept the additional conditions that the Comission has imposed,” Exelon Chief Operation Officer Christopher M. Crane said in a statement. He will become chief executive officer after the merger is completed.

Texas, New York, the U.S. Nuclear Regulatory Commission and Justice Department have signed off on the merger. The Federal Energy Regulatory Commission, which oversees wholesale electricity markets and power transmission, is the last approval needed. The deal is expected to close by March 31, John Rowe, Exelon’s chairman and CEO, said during a Jan. 25 earnings call.

Appeasing the Opposition

Analysts had predicted Maryland would prove Rowe’s toughest challenge in gaining approval for the transaction announced April 28. O’Malley, who in 2006 thwarted a takeover of Baltimore-based Constellation by Florida’s NextEra Energy Inc. (NEE), previously opposed the Exelon bid.

Exelon pledged to buy more electricity from wind, solar and biomass power plants in the state. It also announced a settlement with Electricite de France that guarantees the partner on Constellation’s nuclear power plants a role in the operation of the reactors.

Regulators redirected some of the money that Exelon had earlier pledged to O’Malley into a new $113.5 million fund that will assist low-income customers and support energy efficiency.

Exelon fell 0.6 percent to $39.27 at the close in New York. Constellation declined 0.7 percent to $36.40.

To contact the reporter on this story: Julie Johnsson in Chicago at jjohnsson@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net

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