The utility operator Exelon agreed on Wednesday to buy Pepco Holdings for $6.8 billion in a bid to strengthen its operations on the East Coast.
Under the terms of the deal, Exelon will pay $27.25 a share in cash, a nearly 20 percent premium to Pepco’s closing share price on Tuesday.
The transaction is the latest by Exelon, the Chicago-based utility and serial deal maker. Buying Pepco will add the smaller power company’s operations in New Jersey, Delaware, Maryland and Washington to Exelon’s existing East Coast operations.
The combined Exelon and Pepco businesses will have about 10 million customers.
“Exelon is one of the most respected energy companies in the country, and it is committed to building on the progress our team has made over the last few years to improve system reliability and customer satisfaction,†Joseph M. Rigby, Pepco’s chairman and chief executive, said in a statement.
The deal will be financed with cash on hand, $7.2 billion in financing lined up by Barclays and Goldman Sachs and newly issued Exelon stock.
As part of the transaction, Exelon agreed to reserve $100 million for a customer investment fund for the areas already served by Pepco, money that could be used for assisting lower-income customers or providing rate credits.
The acquirer also agreed to $50 million in charitable contributions throughout Pepco’s service areas for at least a decade.
Exelon was advised by Barclays, Goldman Sachs, Loop Capital Markets and the law firm Kirkland & Ellis.
Pepco was advised by Lazard, Morgan Stanley and the law firms Sullivan & Cromwell and Covington & Burling.
