Consolidation in the utilities industry stepped up a notch on December 19, when Constellation Energy Group, Inc., announced that it would merge with FPL Group, Inc. Though the combined company will assume Constellation's name, 60 percent of its equity will be controlled by FPL shareholders. Nine of the 15 board members at the new Constellation will also be selected by FPL. Constellation controls Baltimore Gas & Electric Company, while FPL is the parent of Florida Power & Light Company.
The all-stock deal values Constellation at about $11 billion and follows two other large utility deals announced last year, Duke Energy Corporation's agreement to buy Cinergy Corp. [Big Deals, August 2005] and MidAmerican Energy Holdings Company's proposed purchase of PacifiCorp [September 2005]. All three deals were spurred by the repeal last summer of the Public Utilities Holding Company Act, a 1935 federal law that limited the ability of electric utilities to merge.
FPL and Constellation hope to close the deal within a year, pending approval by shareholders at both companies and vetting by various state and federal regulators, including the Maryland Public Service Commission, the Federal Energy Regulatory Commission, and the Nuclear Regulatory Commission.
For acquirer FPL Group, Inc. (Juno Beach, Florida)
In-house: General counsel Edward Tancer.
Cravath, Swaine & Moore: Corporate: Philip Gelston, Sarkis Jebejian, and associates Julia Gray, Jamal Haughton, Snehal Patel, Robert "Sascha" Pleasant, Brittain Rogers, Denise Shiu, Joel Unruch, and Noah Weiss. Tax: Stephen Gordon and associate Annie Kim. Environmental: Jeffrey Smithand senior attorney Gregory Battista. Employee benefits: associates Jennifer Conway and Lori Diamond. (All are in New York.) Cravath represented FPL in its proposed merger with New Orleans based Entergy Corporation, which the parties terminated in 2001. Gelston was Cravath's lead partner on that deal.
Skadden, Arps, Slate, Meagher & Flom:Regulatory: Clifford "Mike" Naeve, counsel William Conway, Jr., and associate William Hollaway. Antitrust:counsel John Lyons. (All are in Washington, D.C.) Naeve says that he has done regulatory work for FPL for a number of years.
For target Constellation Energy Group, Inc. (Baltimore)
In-house: General counsel Irving Yoskowitz and associate general counsel Charles Berardesco.
Kirkland & Ellis:Corporate: Thomas Christopher, Mark Director, Drew Grabel, George Stamas, and associates Catherine Jude Debreceny, James Hyre, Alicia Ryan, and William Sorabella. Energy: Mitchell Hertz, Neil Levy,and associate Iskender Catto. Tax: Thomas Evansand associate Tony Lam. Labor and employment: R. Timothy Stephenson and associate Benjamin Gipson. Employee benefits: Alexandra Mihalas and Maureen O'Brien. Antitrust: Mark Kovner. Intellectual property: Lisa Samenfeld and associate Rita Berardino. Real estate: Jennifer Morgan and associates Comer Ireland, Taryn Reynolds, and Christina Soriano. Environmental: Brian Land. (Director, Stamas, Hertz, Levy, Evans, Lam, Stephenson, Gipson, Kovner, and Land are in Washington, D.C.; Mihalas and O'Brien are in Chicago; and the rest are in New York.) Stamas was vice-chairman at Baltimore-based Deutsche Bank Alex. Brown from 1999 to 2001 when Mayo Shattuck III, now the CEO of Constellation, was the chairman and CEO of the investment bank.
Akerman Senterfitt: Florida regulatory issues: Allan Katz. Corporate: Stephen Roddenberry. (Katz is in Tallahassee. Roddenberry is in Miami.) D.M.
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