Exelon Corporation’s (EXC, Financial) $6.8 billion takeover of Pepco Holdings Inc. (POM, Financial) has been permitted by Maryland’s Public Service Commission. This is allowing two of America’s biggest electric utility companies to completing a deal struck nearly 12 months ago.
Shares of Pepco rose 8.8% to hit $27.00 in value while shares of Exelon rose 2.9% to close on Friday at $34.50.
Exelon’s takeover has been approved by Virginia and New Jersey regulators as well as the Federal Energy Regulatory Commission. This takeover is yet to be cleared by Washington, D.C., the base of Pepco.
As of Friday, 7.4 million shares of Exelon were traded compared to the daily average of 6.98 million shares.
Conditions for approval
The conditions by which this takeover has been approved by Maryland include:
- $66 million in rate credits
- $43.2 million for energy-efficiency programs
- Higher reliability standards
Words from Exelon
Exelon said in a statement announcing the deal's approval, "Our proposal delivers significant economic benefits to Maryland customers, increases reliability, promotes energy efficiency and advances clean energy as part of a long-term commitment to improve service and modernize our grid. We will have more to say once we have time to study the order."
Company profile
Exelon Corporation was founded in 1887 and based out of Chicago in Illinois. It is in charge of utilities and its business is about engaging in energy generation and delivery businesses in America. Exelon owns electric generating facilities such as fossil, hydroelectric and nuclear facilities. Solar photovoltaic facilities as well as wind energy generation facilities are owned by Exelon Corporation. Exelon also engages in the selling of renewable energy and other energy-related products and services, as well as the sales of natural gas and oil exploration and production services to customers based in south Pennsylvania and central Maryland. The energy company is also involved in the purchase and regulated retail sale of natural gas. Exelon serves distribution utilities, municipalities, as well as commercial, governmental and industrial customers.
Analysis
Exelon has seen a significant rise in its gross profit margin for the first quarter of its fiscal year 2015 when compared y-o-y. The company has been able to increase both sales and net income at a quicker rate than its competitors in this industry this quarter when compared to the same quarter a year ago. Exelon Corp however, does not have strong liquidity with a quick ratio of 0.94 that shows inability to pay for short term cash needs. Exelon’s liquidity has seen a rise from the same period last year, illustrating improving cash flow.
At the same time, the company’s stockholders’ equity is basically unchanged only increasing by 2.18% from the same quarter last year. These measurements show Exelon is able to survive positions of financial difficulties in the near future.
Analysts are giving Exelon a BUY rating thanks to various company strengths that are outweighing its weaknesses. Company strengths such as its revenue growth, good growth in net income, good cash flow from operations, good return on equity as well as an impressive record of earnings per share growth outweigh the weakness of the company having lackluster performance in the stock.
