Exelon and PSEG have agreed on a merger that would create a new firm called Exelon Electric & Gas with revenues of $27 billion and assets of $79 billion.
Board members of both companies voted unanimously in favour of the merger, which was facilitated by Exelon’s purchase of Public Service Enterprise Group (PSEG) with $12 billion of its stock. The new company, Exelon Electric & Gas (EEG) will have its corporate base in Chicago while energy trading and nuclear operations will be run from Pennsylvania.
The merger is conditional upon the approval of both firm’s shareholders, antitrust legislators and various state regulatory bodies – EEG will have 9 million customers in three US states: Illinois, New Jersey and Pennsylvania.
It is thought that Exelon’s expertise in running their reactor fleet, the largest in the USA at 17 units, would quickly help to deliver cost savings to PSEG’s former fleet. Finalisation of the deal is expected to take up to 15 months but Exelon are expected to dispatch workers to PSEG’s nuclear arm as soon as 17 January 2005. Exelon staff will oversee daily operations and implement their management model at PSEG’s Hope Creek and Salem plants under a $3 million per year contract until finalisation.
Top executive roles will be shared between Exelon’s John Rowe and PSEG’s James Ferland, who are both currently chair, president and CEO of their respective firms.
Rowe will serve as EEG’s president and CEO while Ferland will be non-executive chair of EEG’s board until retirement in 2007. The new board will be composed of 12 members nominated by Exelon and six nominated by PSEG.
Ferland has said that $400 to $500 million in cost savings have been identified and that less than half of that amount will come from job reductions.
|Steve Kidd Feb 05|
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