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Merger between Exelon, Constellation one step closer to finalization

A proposed merger between Exelon Corporation and a Maryland company, Constellation Energy Group has overcome another hurdle after reaching an agreement with Electricite de France SA. Also known as EDF, Electricite de France SA is a minority partner of Constellation, cooperatively owning and operating five nuclear reactors across the United States. EDF initially opposed the merger between Exelon and Constellation, stating that the deal could threaten "the integrity of its investment" in the Maryland-based Constellation.

With the support of EDF, the merger now must gain approval from the Maryland Public Service Commission, which oversees all business sales in the state. The deal must also be approved by the U.S. Nuclear Regulatory Commission and the Federal Energy Regulatory Commission. It has already been accepted by the Department of Justice and other minor regulation bodies.

EDF will now also support the deal following a settlement designed to assuage the French company's fears. According to the U.S. Securities and Exchange Commission, the settlement allows EDF to appoint a chief financial officer for the merged company and gives the firm the ability to audit Exelon's deal with its own affiliates. Additionally, Exelon has agreed not to favor its own nuclear plants over those partially owned by EDF or poach employees for the new venture for two years.

EDF had previously asked for a hearing to investigate the companies' $1 billion agreement with the governor of Maryland, but the hearing has now been cancel at EDF's request. While EDF would never have been able to veto the merger, it effectively pressured government regulators to delay the purchase until its needs could be met.

Source: BusinessWeek, "EDF Withdraws Opposition to Exelon-Constellation Merger," Julie Johnson and Kari Lundgren, Jan. 19, 2012

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