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Exelon completes $7.9B acquisition of Constellation

Exelon Corp. will proceed immediately with staffing decisions now that the company has completed its $7.9 billion acquisition of Baltimore-based Constellation Energy Group, a company spokeswoman said Monday.

The deal, which has been in the works for nearly a year, became official on Monday. On Friday the deal cleared its last regulatory hurdle, opening the way for Chicago-based Exelon to acquire Baltimore’s last Fortune 500 company.

Christopher M. Crane, who had been the president and chief operating officer of Exelon, is the president and CEO of the combined company. Mayo A. Shattuck III, chairman and CEO of Constellation Energy, is the executive chairman.

The company declined to make Crane and Shattuck available to comment Monday.

About 600 jobs will be cut companywide — a result of overlapping positions — with those losses “most impactful” in Baltimore, Crane said in August during a meeting with Exelon employees.

As a result of the deal, Shattuck will receive an estimated $9.3 million in unvested stock options already earned and cash-based performance payments, according to a filing with the Securities and Exchange Commission.

The company will make decisions about staffing in the next 90 to 120 days, with cuts phased in over the next year to 18 months, said company spokeswoman Judith Rader.

Cuts associated with the deal will not happen at Baltimore Gas & Electric Co., Constellation’s regulated utility, for the next two years.

“Likewise, as part of our sale of the Brandon Shores, Crane and Wagner generating plants, we will require that the buyer commit to no involuntary job reductions for two years after the plants are sold,” said Rader, referring to the planned sale of Constellation’s three coal-fired power plants.

Still, the acquisition is expected to add more jobs in Maryland than it cuts, with the new company’s power marketing and retail and wholesale businesses headquartered in Baltimore. The company’s renewable energy businesses would also be consolidated and be based in Baltimore.

The wholesale and retail division is the company’s fastest-growing segment, and renewable energy is also on the rise, said Donald C. Fry, president and CEO of the Greater Baltimore Committee.

“Everyone is paying particular attention to renewable energy as we move forward, so it’s great to have that in our backyard,” he said.

While Constellation has been a “tremendous corporate citizen over the years and a significant player in our overall business economy,” the new company “is going to be an even bigger player for Baltimore City and for the state of Maryland,” he said.

About 200 people — the Exelon Power Team — will come to Baltimore from Pennsylvania, though employment in Pennsylvania will remain stable as other positions transfer there, Rader said.

The new company will keep the Exelon name and remain headquartered in Chicago.

The deal creates one of the nation’s largest competitive energy products and service suppliers with operations in 47 states, the District of Columbia and Canada and with about 100,000 business and public sector customers and 1 million residential customers.

Exelon’s three utilities – BGE, Chicago-based ComEd and Philadelphia-based PECO — serve 6.6 million gas and electric customers across the three states.

Constellation’s shares will no longer be listed on the New York Stock Exchange and the Chicago Stock Exchange, and will cease trading before the market opens Tuesday.

Those who were shareholders of Constellation and Exelon as of March 9 will receive pro-rated dividends to be paid out April 11 at rates previously approved by the boards of the companies.

Those with shares in Exelon — including former Constellation shareholders — as of May 15 will get a second pro-rated dividend payout on June 8. The two pro-rated dividends will equal Exelon’s regular quarterly amount.

The Constellation name will live on as the companies’ competitive power division, which will be headquartered in a $120 million building to be constructed at Harbor Point in Baltimore. Constellation will move from its current headquarters on Pratt Street at the Inner Harbor.

Under the all-stock deal, Constellation shareholders will get 0.93 shares of Exelon for each share of Constellation.

Exelon’s shares gained 90 cents, or 2.31 percent, to close Monday at $39.81.

Constellation’s shares gained $1.08, or almost 3 percent, to close Monday at $37.23.

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