U.S. Sets Terms for Exelon, Constellation Merger

Plant sell-offs required for approval.

The U.S. Justice Department said Dec. 21 that power companies Exelon and Constellation Energy would have to sell off three power plants to get approval for their $7.9 billion merger.

The Justice Department's antitrust division filed a lawsuit in a Washington court to block the merger as it currently stands, holding that it would reduce market competition in the mid-Atlantic region.

But if the two sell off three power plants in Maryland, the Justice Department said that would resolve its objections to the deal.

The two companies announced their merger on April 28, in a move that would create one of the country's largest electricity providers.

The combined company would serve 38 of the country's 50 states, as well as two Canadian provinces, with more than half of its 34,000 megawatts capacity coming from nuclear power.

Justice authorities said in a statement that the deal would give the new company control of as much as 28 percent of the generating capacity in the densely populated mid-Atlantic area, from Virginia to New Jersey.

"The combination of the assets would enhance the incentive and ability of the merged firm to raise wholesale electricity prices and reduce output," it said in a statement.

The merger, a stock-for-stock deal, would give existing Exelon shareholders 78 percent control of the combined company, which would be called Exelon and be based in Exelon's current Chicago headquarters.

Copyright Agence France-Presse, 2011

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