EDF Withdraws Opposition to Exelon-Constellation Merger
January 19, 2012, 5:02 AM ESTBy Julie Johnsson and Kari Lundgren
(Updates with agreement terms in second paragraph.)
Jan. 17 (Bloomberg) -- Electricite de France SA withdrew its opposition to Exelon Corp.’s $7.42 billion takeover of Constellation Energy Group Inc. after reaching an agreement with the U.S. utilities on a nuclear-power venture.
EDF, Constellation’s minority partner in five U.S. nuclear reactors, will have the right to appoint a chief financial officer to the venture after the merger closes, according to a settlement agreement with the U.S. Securities and Exchange Commission made public today.
Exelon, which owns the largest U.S. fleet of nuclear plants, also agreed to not poach venture employees for two years or treat its nuclear plants more favorably than those partially owned by Paris-based EDF, according to the filing. EDF will have the right to audit Chicago-based Exelon’s arrangements with its affiliates.
The safeguards satisfied EDF’s concerns that the merger might threaten “the integrity of its investment,” EDF’s Chief Financial Officer Thomas Piquemal said in a statement today.
Spread Narrowing
Investors responded by narrowing the spread between Exelon’s offer and the value of Baltimore-based Constellation’s shares to 68.15 cents in New York, compared with 72.72 cents on Jan. 13.
The settlement also clears another potential roadblock for the merging companies in Maryland.
At EDF’s request, state regulators canceled a hearing scheduled for 2 p.m. today in Baltimore into EDF’s demands that Exelon and Constellation provide all correspondence relating to the companies’ $1 billion settlement agreement with Maryland Governor Martin O’Malley announced Dec. 15.
EDF, which didn’t hold veto rights over the merger, used its status as Constellation’s second-largest shareholder to press regulators to block the transaction.
EDF warned in a Dec. 5 filing that it faced “a long-term partnership with Exelon that is fraught with peril.” The merger would cost Constellation Energy Nuclear Group, the nuclear venture, autonomy and control over its two nuclear reactors in Maryland, EDF said.
The Maryland Public Service Commission is scheduled to vote on the merger by Feb. 17. The Federal Energy Regulatory Commission and U.S. Nuclear Regulatory Commission have yet to approve the transaction, which has been cleared by the Justice Department and regulators in New York and Texas.
--With assistance from Jim Polson in New York. Editors: Jasmina Kelemen, Tina Davis
To contact the reporters on this story: Kari Lundgren in London at klundgren2@bloomberg.net; Julie Johnsson in Chicago at jjohnsson@bloomberg.net
To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net
