Exelon's Constellation buys Integrys Energy Services

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Exelon Corp. and Integrys Energy Group entered into a definitive agreement for Exelon to purchase Integrys Energy Services Inc., a competitive retail electricity and natural gas unit serving about 1.2 million commercial, industrial, public sector and residential customers across 22 Midwest, mid-Atlantic and Northeastern states and the District of Columbia.

Integrys Energy Services will become part of Exelon’s Constellation business unit, strengthening Constellation’s retail power and gas business, serving about 2.5 million residential and business customers across the continental U.S.

Exelon will pay $60 million for the Integrys retail operations, plus adjusted net working capital at the time of closing. Integrys Energy Services had adjusted working capital of about $183 million as of May 31, 2014. The transaction does not include Integrys’ energy assets — primarily solar power — which will remain a part of Integrys Energy Group, Inc.

Integrys was in the late stages of a competitive process to divest its electric and natural gas retail marketing businesses as part of a June 23, 2014, news release announcing a definitive agreement between Wisconsin Energy Corp. and Integrys, where Wisconsin Energy would acquire Integrys Energy Group in a stock and cash transaction valued at $9.1 billion.

Established in 1994, Integrys Energy Services, Inc. provides competitive supply solutions, structured products and strategies that allow retail residential, commercial and industrial customers throughout the northeast quadrant of the United States to manage their energy needs. At December 31, 2013, Integrys Energy Services, with about 280 employees, had $2 billion in annual sales.

Integrys Energy Services will operate under the Constellation brand after the transaction closes. Residential and commercial customers of Integrys will experience no disruption to service as a result of the transaction and all existing customer contracts will be honored. This includes Integrys’ municipal electricity aggregation contract with the city of Chicago. The contract is currently scheduled to expire in May 2015.

Baltimore-based Constellation is a competitive retail supplier of electricity, natural gas and energy products and services for homes and businesses across the continental U.S. Its family of retail businesses serves more than 100,000 business and public-sector customers and about 1 million residential customers.

The transaction is conditioned on approval by the Federal Energy Regulatory Commission and is subject to the notification and reporting requirements under the Hart-Scott-Rodino Act. The companies expect to close in fourth quarter 2014 or first quarter 2015.

Lazard is acting as sole financial advisor to Integrys Energy Group, and Bracewell & Giuliani LLP is providing legal counsel. Cadwalader, Wickersham & Taft LLP served as legal advisors to Exelon.

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