ConEdison retail electricity sale to Constellation Energy the result of an auction, CEO says

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Consolidated Edison (NYSE: ED) conducted an auction before selling ConEdison Solutions’ retail electricity and natural gas business to Exelon-owned (NYSE:EXC) Constellation Energy, said Mark Noyes, CEO of ConEdison Solutions.

Noyes described the three-month long sale process as “thorough.” A handful of strategics participated in the sale, with the group narrowed down to a smaller group in the past few weeks, Noyes said.

This morning, Baltimore-based Constellation announced the acquisition of ConEdison Solutions’ retail business today for an undisclosed sum. Noyes and Constellation President Mark Huston both declined to comment on the deal’s valuation and the financing for the deal.

Constellation was the leading bidder in the auction, Huston said. ConEdison’s retail electric business appealed to Constellation because the business line was owned by a top-tier seller adjacent to Constellation’s current territory, he said.

From a strategic standpoint, ConEdison in June 2015 looked at the separation of its retail electricity business from its regulated utility business due to its competitive power unit’s “volatile earnings” cycle, Noyes said. The seller intends to redeploy sale proceeds around ConEdison’s utility-scale solar and wind project development, Noyes said.

As of 31 December, ConEdison was the sixth largest owner of North American solar power assets with 1,062 megawatts of solar and wind projects in service or development and a USD 1.7bn three-year capital budget.

The deal requires Hart-Scott-Rodino approval and is expected to close as early as 1 September, Huston said.

ConEdison’s retail business has 560,000 customers in 12 Northeastern, Mid-Atlantic and Midwestern states, as well as Texas and the District of Columbia, according to a press release.

Exelon acquired Constellation in an April 2011 merger valued at USD 10.4bn.

UBS advised ConEdison on the sale and Baker Botts was its legal advisor. Day Pitney was the legal advisor for Constellation Energy.

by Michael Schoeck in New York

As seen in the mergermarket newsletter on 27/07/2016

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