Juno Beach, FL & Baltimore, MD, Dec. 19, 2005 — FPL Group Inc. and Constellation Energy, two American energy companies, announced that they have signed a definitive agreement to create the nation’s largest competitive energy supplier and its second-largest electric utility portfolio.
The transaction will create a company with a market capitalization of approximately $28 billion (based on current market values), combined annual revenues of $27 billion, and $57 billion in total assets. The combined company will be named Constellation Energy.
Under the definitive merger agreement, which was unanimously approved by both companies’ boards of directors, each common share of Constellation Energy outstanding immediately prior to the merger will be converted into 1.444 common shares of Constellation Energy at the time of the merger, and each common share of FPL Group outstanding immediately prior to the merger will be converted into one share of Constellation Energy at the time of the merger.
This represents a premium to Constellation Energy shareholders of approximately 15 percent based on the exchange ratio calculated using the average of the 20-day closing prices for both companies ending December 13, 2005. Upon consummation of the merger, FPL Group shareholders will own approximately 60 percent, and Constellation Energy’s shareholders will own approximately 40 percent of the combined company.
Based on both companies’ previously communicated earnings expectations, the transaction is expected to be accretive to both companies in the first full year of combined operations, excluding transaction and integration costs and the positive effects of purchase accounting.
The combined company will maintain dual headquarters in Juno Beach, Fla., and Baltimore. It will have approximately 21,750 employees and will serve more than 5.5 million electric customers in Florida and Maryland and 625,000 gas customers in Maryland. Its competitive wholesale and retail businesses will serve thousands of commercial, industrial and utility customers, including 72 of the FORTUNE 100 companies. Its generation portfolio will exceed 45,000 megawatts of capacity. It will own and operate seven nuclear power stations with eleven units, including FPL Group’s pending acquisition of the Duane Arnold nuclear station.
Lewis Hay, III, currently chairman, president and chief executive officer of FPL Group, will become chief executive officer of Constellation Energy. Mayo A. Shattuck III, currently chairman, president and chief executive officer of Constellation Energy, will become chairman of the board of Constellation Energy upon completion of the merger and will also head the combined company’s competitive energy business. The Constellation Energy board will be composed of 15 members, nine of whom will be named by FPL Group, and six of whom will be named by Constellation Energy. Thirteen of the company’s board members will be non-executive directors.