Market Overview

The Exelon-Pepco Merger Approval Was 'Quite Unexpected'

Share:
The Exelon-Pepco Merger Approval Was 'Quite Unexpected'

Deutsche Bank’s Jonathan Arnold maintained a Buy rating for Pepco Holdings, Inc. (NYSE: POM), with a price target of $34, after the unexpected approval of the company’s merger with Exelon Corporation (NYSE: EXC).

After almost two years, the DC Public Service Commission has given its approval for Exelon’s purchase of Pepco Holdings in 2-1 vote. The deal had already received approval from all other relevant regulators and is now ready to move forward. “The approval was quite unexpected with most analysts, including us, thinking the deal was likely over,” analyst Jonathan Arnold wrote.

Revised Settlement Agreement

The commission gave its approval, albeit subjecting the deal to its own revised settlement agreement, which was issued by the PSC in February. At that time, the PSC had indicated that the deal could move forward only if all of the original settling parties agreed to the PSC’s revisions. The PSC suggested the alternative of the settling parties getting together to request other relief.

Arnold mentioned, however, that neither of these outcomes occurred. On March 7, the two companies filed recommending three options for approval: “1) approve the original settlement agreement; 2) approve the revised settlement agreement; or 3) approve an alternative agreement. The PSC ultimately selected option 2.”

Take On The Approval

“We are maintaining our estimates and price target which we had already updated to assume the merger would close at the end of Q1/early Q2,” the analyst wrote. The EPS estimates for 2016 and 2017 would have been raised by $0.05-$0.10 had the deal failed. “That said, we did not see a material impact on our EXC valuation if the deal had failed to close,” the Deutsche Bank report added.

Latest Ratings for POM

DateFirmActionFromTo
Sep 2015KeyBancUpgradesOverweight
Jul 2014CitigroupMaintainsNeutral
May 2014Credit SuisseMaintainsUnderperform

View More Analyst Ratings for POM
View the Latest Analyst Ratings

 

Related Articles (EXC + POM)

View Comments and Join the Discussion!

Posted-In: Deutsche Bank Jonathan ArnoldAnalyst Color Long Ideas Reiteration Analyst Ratings Trading Ideas Best of Benzinga

Latest Ratings

StockFirmActionPT
URIVertical ResearchInitiates Coverage On310.0
PCARVertical ResearchInitiates Coverage On95.0
DEVertical ResearchInitiates Coverage On345.0
CNHIVertical ResearchInitiates Coverage On16.0
AGCOVertical ResearchInitiates Coverage On119.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com