U.S. Settles With Exelon Over $7.9 Billion Constellation Takeover Deal

The U.S. Justice Department agreedto let Exelon Corp. carry out its $7.9 billion acquisition ofConstellation Energy Group Inc. (CEG) on condition that Exelon sellthree electricity-generating plants in Maryland.

The department announced the agreement today shortly afterit filed a lawsuit in U.S. District Court in Washington allegingthe takeover would eliminate competition and lead to an increasein wholesale electricity prices for consumers in Mid-Atlanticstates. The agreement must be approved by a federal judge.

��Competition in wholesale electricity markets is vital tothe economic well-being of consumers and businesses,�� SharisPozen, acting assistant attorney general for the department��santitrust division, said in an e-mailed statement. ��Thesedivestitures will preserve that critical competition for thebenefit of electricity customers throughout the mid-Atlantic.��

Exelon expects to complete the transaction early next year,Christopher Crane, who��ll become chief executive officer of thecombined company, said today in a statement announcing thesettlement.

The deal would create the largest U.S. utility owner andpower generator. Sale of the three Baltimore-area plants wasincluded in the initial takeover announcement by Chicago-basedExelon on April 28 to reduce the combined company��s marketshare in PJM Interconnection LLC, the largest U.S. power market.

Exelon on Oct. 11 announced additional terms for sale ofthe plants had satisfied the market monitor of PJM.

Maryland Accepts

Maryland��s governor and energy department also acceptedthose terms as part of a Dec. 14 settlement. That state��sutility regulator is scheduled to decide on the deal Feb. 17.

Exelon already has approval for the transaction fromregulators in Texas and New York. It had asked the FederalEnergy Regulatory Commission for a decision by Jan. 5.

Exelon announced the takeover of Baltimore-basedConstellation in April. It will gain stakes in five nuclearreactors and become the l! argest U .S. electricity marketer.Exelon is the largest owner and operator of U.S. nuclear plants,and owns electric utilities Commonwealth Edison in Chicago andPeco Energy in Pennsylvania.

Constellation owns utility Baltimore Gas & Electric. Mostof its revenue comes from retail sale of electricity in statesthat allow competition, a business assembled and expanded byChief Executive Officer Mayo Shattuck after the collapse ofenergy trader Enron Corp. in 2001.

If completed, the deal will be Exelon��s largesttransaction. Exelon has tried unsuccessfully three times to buyother power companies since 2003, and Constellation has been thetarget of two failed bids. A $14.8 billion sale of Constellationto NextEra Energy Inc., the largest U.S. wind-power generatorand owner of Florida��s largest utility, collapsed in 2005, withNextEra citing interference by officials in Maryland.

The case is U.S. v. Exelon Corp. (EXC), 11-cv-02276, U.S. DistrictCourt, District of Columbia (Washington).