FPL buys Constellation in $11b deal

BALTIMORE -- FPL Group Inc.'s purchase of Constellation Energy Group Inc. in an $11 billion stock deal disclosed yesterday creates one of the nation's biggest energy companies and gives Constellation additional power to sell through its energy trading business.

Juno Beach, Fla.-based FPL Group, with operations nationwide, derives most of its revenue from its utility subsidiary, Florida Power & Light. Constellation Energy, based in Baltimore, operates Baltimore Gas and Electric, but gets most of its sales from nonregulated operations, including energy trading.

The combined company, to be called Constellation Energy, will have a market capitalization of about $28 billion, revenue of $27 billion, and total assets of $57 billion.

FPL has more generation capacity and less peak demand, while Constellation, a major power trader, is in the opposite position, executives from the two companies told investors.

''The pursuit of this transaction and why the marriage made so much sense to us is that now we can grow without constraint," said Mayo A. Shattuck, chairman, president, and chief executive of Constellation Energy, who will become chairman of the new company's board.

Following the merger, Constellation will have about 21,750 employees serving more than 5.5 million electric customers in Florida and Maryland and 625,000 gas customers in Maryland.

The new company will also have the nation's largest electric generation portfolio, with a capacity of more than 45,000 megawatts.

Lewis Hay, chairman, president, and chief executive of FPL Group, who will be CEO of the new Constellation Energy, said both sides felt it was important to choose partners before industry consolidation eliminated their options.

Hay said he expects rates paid by consumers to fall over time, but not before 2008.

Under the terms of the transaction, which the companies described as a merger, each share of Constellation Energy held will be converted into 1.444 shares of the combined company, while each FPL Group share will be converted into one share of the new company.

Constellation shares fell $2.52, or 4.1 percent, to close at $59.10 on the New York Stock Exchange.