Blockbuster Utility M&A Deal Halted by D.C. Regulator
August 26, 2015
Today, the Public Service Commission of the District of Columbia voted unanimously to block the merger between Exelon and Pepco Holdings. Both Exelon and Pepco are utility operators – involved in the sale and distribution of natural gas and electricity, along with other energy services. Washington D.C .’s utilities commission’s unanimous blocked vote upended Exelon’s $6.8 billion acquisition of Pepco and sent Pepco’s stock tumbling by as much as 20 percent.
The merger had already received the blessing on many power regulators including regulators from Delaware, New Jersey, and Virginia. Even the Federal Energy Regulatory Commission (FERC) had approved the deal. However, the D.C. utility regulatory body felt that the merger was not in public interest citing that the lessened competition would lead to rate hikes on both the wholesale and retail side of the energy business.
The merger would have created the country’s biggest utility operator – serving 10 million customers. This deal follows quickly on the heels of another blockbuster utility M&A deal where the Southern Company, another big power company, bought AGL Resources for around $8 billion. Exelon, Pepco Holdings, and interested/related parties have 30 days to appeal the D.C. commission’s decision. Shortly after the announcement of the blocked merger, Exelon and Pepco Holdings released a joint statement sharing their disappointment and promising to review their next strategic options.
