Filed by Exelon Corporation
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12 of the Securities Exchange Act of 1934
Subject Company: Constellation Energy Group, Inc.
(Reg. No. 333-175162)
On October 25, 2011, Exelon began to use the following slides concerning the proposed merger and other information in a series of meetings with Maryland stakeholders:
Exelon and
Constellation Energy Merger Update October 26, 2011
Creating a Clean, Competitive Future |
Cautionary
Statements Regarding Forward-Looking Information
1
Except for the historical information contained herein, certain of the matters discussed in this
communication constitute forward-looking statements within the meaning of the
Securities Act of 1933 and the Securities Exchange Act of 1934, both as amended by the Private
Securities Litigation Reform Act of 1995. Words such as may, will, anticipate, estimate,
expect, project, intend, plan, believe,
target, forecast, and words and terms of similar substance used in
connection with any discussion of future plans, actions, or events identify forward-looking
statements. These forward-looking statements include, but are not limited to, statements
regarding benefits of the proposed merger of Exelon Corporation (Exelon) and Constellation
Energy Group, Inc. (Constellation), integration plans and expected synergies, the expected
timing of completion of the transaction, anticipated future financial and operating performance and
results, including estimates for growth. These statements are based on the current expectations
of management of Exelon and Constellation, as applicable. There are a number of risks and
uncertainties that could cause actual results to differ materially from the forward-looking
statements included in this communication regarding the proposed merger. For example, (1) the companies
may be unable to obtain shareholder approvals required for the merger; (2) the companies may be unable
to obtain regulatory approvals required for the merger, or required regulatory approvals may
delay the merger or result in the imposition of conditions that could have a material adverse
effect on the combined company or cause the companies to abandon the merger; (3) conditions to
the closing of the merger may not be satisfied; (4) an unsolicited offer of another company to
acquire assets or capital stock of Exelon or Constellation could interfere with the merger; (5) problems may
arise in successfully integrating the businesses of the companies, which may result in the combined
company not operating as effectively and efficiently as expected; (6) the combined company may
be unable to achieve cost-cutting synergies or it may take longer than expected to achieve
those synergies; (7) the merger may involve unexpected costs, unexpected liabilities or
unexpected delays, or the effects of purchase accounting may be different from the companies expectations;
(8) the credit ratings of the combined company or its subsidiaries may be different from what the
companies expect; (9) the businesses of the companies may suffer as a result of uncertainty
surrounding the merger; (10) the companies may not realize the values expected to be obtained
for properties expected or required to be divested; (11) the industry may be subject to future
regulatory or legislative actions that could adversely affect the companies; and (12) the companies may be
adversely affected by other economic, business, and/or competitive factors. |
2
Cautionary Statements Regarding Forward-Looking
Information (Continued)
Other unknown or unpredictable factors could also have material adverse effects on future results,
performance or achievements of Exelon, Constellation or the combined company. Discussions of
some of these other important factors and assumptions are contained in Exelons and
Constellations respective filings with the Securities and Exchange Commission (SEC), and
available at the SECs website at www.sec.gov, including: (1) Exelons 2010 Annual Report on Form 10-K in
(a) ITEM 1A. Risk Factors, (b) ITEM 7. Managements Discussion and Analysis of Financial
Condition and Results of Operations and (c) ITEM 8. Financial Statements and Supplementary
Data: Note 18; (2) Exelons Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 2011 in (a) Part II, Other Information, ITEM 1A. Risk Factors, (b) Part 1,
Financial Information, ITEM 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations and (c) Part I, Financial Information, ITEM 1. Financial Statements: Note
13; (3) Constellations 2010 Annual Report on Form 10-K in (a) ITEM 1A. Risk
Factors, (b) ITEM 7. Managements Discussion and Analysis of Financial Condition and
Results of Operations and (c) ITEM 8. Financial Statements and Supplementary Data: Note 12; and (4)
Constellations Quarterly Report on Form 10-Q for the quarterly period ended June 30,
2011 in (a) Part II, Other Information, ITEM 1A. Risk Factors and ITEM 5. Other Information, (b)
Part I, Financial Information, ITEM 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations and (c) Part I, Financial Information, ITEM 1. Financial Statements: Notes to
Consolidated Financial Statements, Commitments and Contingencies. These risks, as well as
other risks associated with the proposed merger, are more fully discussed in the definitive
joint proxy statement/prospectus included in the Registration Statement on Form S-4 that
Exelon filed with the SEC and that the SEC declared effective on October 11, 2011 in connection
with the proposed merger. In light of these risks, uncertainties, assumptions and factors, the forward-looking
events discussed in this communication may not occur. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date of this
communication. Neither Exelon nor Constellation undertake any obligation to publicly release
any revision to its forward-looking statements to reflect events or circumstances after the
date of this communication. |
Additional
Information and Where to Find It 3
In connection with the proposed merger between Exelon and Constellation, Exelon filed with the SEC a
Registration Statement on Form S-4 that included the definitive joint proxy
statement/prospectus. The Registration Statement was declared effective by the SEC on October
11, 2011. Exelon and Constellation mailed the definitive joint proxy statement/prospectus to
their respective security holders on or about October 12, 2011. WE URGE INVESTORS AND SECURITY
HOLDERS TO READ THE DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT
DOCUMENTS FILED WITH THE SEC, BECAUSE THEY CONTAIN IMPORTANT INFORMATION about Exelon,
Constellation and the proposed merger. Investors and security holders may obtain copies of all documents filed
with the SEC free of charge at the SEC's website, www.sec.gov. In addition, a copy of the definitive
joint proxy statement/prospectus may be obtained free of charge from Exelon Corporation,
Investor Relations, 10 South Dearborn Street, P.O. Box 805398, Chicago, Illinois
60680-5398, or from Constellation Energy Group, Inc., Investor Relations, 100 Constellation
Way, Suite 600C, Baltimore, MD 21202. |
Transaction
Overview |
Transaction
Overview
100%
stock
0.930
shares
of
EXC
for
each
share
of
CEG
$2.10 per share Exelon dividend maintained
Expect to close in early 1Q 2012
Exelon and Constellation shareholder approvals in 4Q 2011
Regulatory
approvals
including
FERC,
DOJ,
MD,
NY,
TX
(1)
Executive Chairman: Mayo Shattuck
President and CEO: Chris Crane
Board of Directors: 16 total (12 from Exelon, 4 from Constellation)
Exelon Corporation
78% Exelon shareholders
22% Constellation shareholders
Corporate headquarters: Chicago, IL
Constellation headquarters: Baltimore, MD
No change to utilities
headquarters
Significant employee presence maintained in IL, PA and MD
Company Name
Consideration
Pro Forma
Ownership
Headquarters
Governance
Approvals &
Timing
5
(1) Secured approval from Texas PUCT on August 3, 2011
|
This Combination Is
Good for Maryland
Maintains employee presence and platform for growth in Maryland
Exelons Power Team will be combined with Constellations wholesale and
retail business
under
the
Constellation
brand
and
will
be
headquartered
in
Baltimore
Constellation and Exelons renewable energy business headquartered in
Baltimore in new or substantially refurbished office center
BGE maintains independent operations headquartered in Baltimore
No involuntary merger-related job reductions at BGE for two years after
close
Supports Marylands economic development and clean energy infrastructure
$4 million to support EmPower Maryland Energy Efficiency Act
25 MWs of renewable energy development in Maryland (>$50 million)
Charitable contributions maintained for at least 10 years (~$10 million per
year)
Provides direct benefits to BGE customers
$15 million commitment for the Maryland PSC to use directly for the benefit of BGE
customers
Over $110 million to BGE residential customers from $100 one-time rate
credit We
will
bring
direct
benefits
to
the
State
of
Maryland,
the
City
of
Baltimore and
BGE customers. Total direct investment in excess of $250 million.
6 |
Expertise Across the
Energy Value Chain Reserves (gas)
266 bcf
Owned Generating
Capacity
35 GWs
(1)
Electric
Transmission
7,350 miles
Electric & Gas Dist.
6.6 million
customers
Retail &
Wholesale Volumes
(2)
Note: Data as of 9/30/11 unless stated otherwise.
(1) Generation capacity net of physical market mitigation assumed to be 2,648
MW consisting of Brandon Shores (1,273 MW), H.A. Wagner (976 MW) and CP
Crane (399 MW). (2) Electric load includes all booked 2011E
competitive retail sales, wholesale sales, and sales to load serving entities including ComEd swap
as
of
9/30/11.
Gas
load
includes
all
booked
and
forecasted
2011E
competitive
retail
sales
as
of 9/30/11.
7
Upstream
Downstream
(Electric & Gas)
~191 TWh, 372 bcf |
A Leader in
Operating Regulated Utilities in Large Metropolitan Areas
3.8 million electric customers
Service Territory: 11,300 square miles
Peak Load
(1)
: 23,753 MW
1.6 million electric customers
0.5 million gas customers
Service Territory: 2,100 square miles
Peak Load
(1)
: 8,983 MW
1.2 million electric customers
0.7 million gas customers
Service Territory: 2,300 square miles
Peak Load
(1)
: 7,236 MW
(1)
Peak load represents all-time peak load.
8 |
Current Merger
Status |
Exelon Has
Strengthened its Merger Proposal
Additional safeguards for BGE
New
governance
measures
to
ensure
BGE
is
locally
managed
and
has
the
resources to ensure safe, reliable delivery of power
Ring-fencing measures to stay in place
MPSC to receive notification on a wide range of financial metrics, to monitor
BGEs financial health
Resolution of market power concerns
Settlement with PJM market monitor limits universe of potential buyers of coal
plants
slated
for
divestiture,
provides
assurances
on
how
merged
company
will
bid into PJM
10
BGE will remain locally managed, will have the same accountability to
the PSC as it currently does, and will have a strong voice at Exelon. As
part of Exelon, BGE will continue to provide safe and reliable service to
its customers at just and reasonable rates
Ken DeFontes, BGE CEO |
Some Conditions
Proposed by Other Parties to the Merger are Unnecessary and Harmful
Dramatic increase in renewable requirement
Proposal would require Exelon to build >400 megawatts of renewable
energy
Unnecessary and would create estimated $1 billion burden to be borne
by shareholders or customers
Limitations on future growth
Proposals would limit potential of the combined company or require
divestiture of BGE
Rate freeze
Would jeopardize BGEs ability to make needed capital investments
11
Exelons 25 MW renewable proposal is 5x greater than
First Energy/Allegheny commitment |
Path
Forward |
On Track for Merger
Close in Early 2012 2011
2012
Q3
Q4
Q1
Submitted HSR filing on May 31, 2011 for review under U.S. antitrust laws and certified
compliance with second request
Filed for indirect transfer of Constellation Energy licenses on May 12, 2011
Filed merger approval application related filings on May
20, 2011. Settlement agreement filed with PJM Market
Monitor on October 11, 2011
Expect decision in Q4 2011
Approvals
DOJ
NRC
Maryland PSC
January 5, 2012
Statutory deadline
Shareholder vote
Shareholder vote
November 17, 2011
FERC
SEC
New York PSC
Texas PUC
Secured approval from Texas PUC on August 3, 2011
Record Date
October 7, 2011
Joint proxy statement declared effective
October 11, 2011
Rebuttal testimony filed
October 12, 2011
Evidentiary hearings begin
October 31, 2011
FERC order expected by
November 16, 2011
13
Regulatory proceedings are progressing as planned and we are on track to close
in early 2012
Note :
On September 26
t
2011, the Department of Public Utilities in Massachusetts concluded that it does not have
jurisdiction over the proposed transaction between Exelon and Constellation.
th |
Questions?
|