Pepco Sued by Investor Over $6.8 Billion Exelon Takeover
Pepco Holdings Inc. (POM), an electricity and natural gas provider in the mid-Atlantic region, was sued by a shareholder who claims the company is undervalued in a proposed $6.8 billion takeover by Exelon Corp. (EXC)
As part of the $27.25-a-share transaction, Pepco Chief Executive Officer Joseph M. Rigby unfairly stands to collect more than $16 million and the deal carries potential breakup fees and expenses of more than $300 million, investor Natalie Gordon contends.
Pepco provides electricity and gas to 5.2 million customers in Delaware, Washington, Maryland and New Jersey, according to court papers. When combined with Exelon, the largest U.S. nuclear operator, the company will serve about 10 million customers, according to an Exelon statement.
The buyout “will provide struggling Exelon with a windfall acquisition” in the face of “depressed power prices and increasing competition from wind and natural gas in recent years,” according to Gordon’s complaint, filed May 5 in Delaware Chancery Court in Wilmington.
“The proposed transaction also fails to account for Pepco’s significant future earning potential,” Gordon said.
Myra Oppel, a spokeswoman for Washington-based Pepco, didn’t immediately respond to a phone message yesterday seeking comment on the lawsuit.
Pepco rose 16 cents to $27.30 in New York Stock Exchange composite trading yesterday.
The case is Gordon v. Pepco, CA9612 Delaware Chancery Court (Wilmington).
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