Exelon 'On Track' To Close Constellation Merger By Early 2012, Despite Objections

Exelon Corp. (EXC) said Monday it remains "on track" to close its proposed merger with Constellation Energy Group Inc. (CEG) early next year, despite objections to the combination raised by a Maryland official.

In April, Exelon agreed to buy Constellation in a stock-for-stock deal valued at about $7.9 billion. The deal will allow Exelon, the largest U.S. operator of nuclear-power plants, to combine its generation fleet with Constellation's sizable nuclear fleet and its large retail marketing business.

Chicago-based Exelon said that "regulatory proceedings are progressing well and we are on track to close in early [first quarter] 2012," according to documents filed Monday with the Securities and Exchange Commission, ahead of a company presentation.

The most crucial and difficult of those approvals is likely to be from Maryland regulators who oversee Constellation's Baltimore Gas & Electric utility. Objections raised late Friday by a Maryland official could complicate approval that the companies need from the Maryland Public Service Commission. But Exelon said it was still confident it will get the approval.

The state of Maryland doesn't believe the PSC should approve the merger, as proposed, because Baltimore Gas & Electric would be owned by a large out-of-state company, diluting state control, and the merged company would have exceptional "exposure to nuclear risk" owing to its large nuclear fleet, which would put the utility at risk, Malcolm Woolf, director of the state Energy Administration, said in testimony filed with the PSC late Friday. Woolf added the state was concerned about the combined company's potential exercise of market power, or virtual monopoly over the region's electricity market.

Exelon and Constellation "welcome input from stakeholders" as the companies "work toward completing our planned merger," Exelon said Monday in a statement. An Exelon spokeswoman declined to comment any further than the statement.

Exelon has said that the companies' fleets of nuclear power plants would put the combined company in a good position to benefit from rising power prices as new federal pollution limits force the closure of older coal-fired power plants.

-By Cassandra Sweet, Dow Jones Newswires; 415-439-6468; cassandra.sweet@dowjones.com

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