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Chicago-based Exelon Corp. and Washington, D.C.-based Pepco Holdings Inc. have signed a definitive agreement to combine the two companies in an all-cash transaction that totals $6.8 billion.

The agreement, which has been unanimously approved by both companies' boards of directors, brings together Exelon's electric and gas utilities - Baltimore Gas and Electric (BGE), Commonwealth Edison (ComEd), and PECO - and Pepco Holdings' electric and gas utilities - Atlantic City Electric, Delmarva Power and Potomac Electric Power Co. (Pepco).

"Exelon and Pepco Holdings have a compelling strategic rationale for merging, given our geographic proximity and similar utility business models," comments Exelon President and CEO Chris Crane.

According to Exelon, the combined utility businesses will serve approximately 10 million customers and have a rate base of approximately $26 billion. As part of the acquisition, Exelon says the two companies have committed to build on the improvements to service reliability that Pepco Holdings has already achieved for its utilities.

In addition, Exelon reports that upon completion of the transaction, it will provide an aggregate $100 million - equivalent to approximately $50 per customer - for a customer investment fund to be utilized across Pepco Holdings' service territories as each state public service commission deems appropriate for customer benefits, such as rate credits, assistance for low-income customers and energy efficiency measures.

As is the case with BGE in Baltimore, ComEd in Chicago and PECO in Philadelphia, Pepco Holdings utilities will retain their regional headquarters: May's Landing, N.J., for Atlantic City Electric, Newark, Del., for Delmarva Power and Washington, D.C., for Pepco.

Crane will remain president and CEO of the combined company. Pepco Holdings Chairman, President and CEO Joseph M. Rigby, who previously announced his planned retirement, will remain in his current roles with the company until the closing of the transaction. Exelon anticipate closing in the second or third quarter of 2015.

The transaction, Exelon notes, requires the approval of Pepco Holdings' stockholders. Completion of the transaction is also conditioned upon approval by the Federal Energy Regulatory Commission, the District of Columbia Public Service Commission and several state commissions, including the Delaware Public Service Commission, Maryland Public Service Commission and New Jersey Board of Public Utilities.

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