In Deal Talks: Exelon/Constellation, BJ's Wholesale, Others

by: Alacra Pulse Check Blog

By Angus Robertson

Exelon (NYSE:EXC) is buying Constellation Energy (NYSE:CEG) in a $7.9 billion deal, the latest in a wave of consolidation among energy companies, particularly utilities.

Combining Exelon and Constellation "would have a solid strategic rationale bringing together the largest U.S. merchant generation fleet and the largest retail electricity supplier," said Deutsche Bank analysts in a note.

"From Constellation's perspective, in addition to the share price premium and dividend increase, Exelon brings hard assets to support its competitive energy products business," BMO Capital analysts wrote. "We believe the companies have taken steps to address potential regulatory concerns, including mitigating competitive issues and maintaining a significant presence in Baltimore."

In 2009, Constellation, based in Baltimore, agreed to be sold to Berkshire Hathaway's MidAmerican Energy Holdings for $4.7 billion. It eventually canceled the deal and instead sold some nuclear assets to Électricité de France for $4.5 billion, DealBook notes.

In 2008, Exelon pursued a $7.5 billion hostile bid for NRG Energy (NYSE:NRG). When it could not win over NRG's shareholders, Exelon dropped the deal.

As noted on Pulse Check in January, Morningstar analysts and named Constellation among 19 potential takeover targets for 2011.

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Private equity firm Apollo Management submitted a buyout bid for retailer BJ's Wholesale Club Inc (NYSE:BJ) for more than $3 billion, the New York Post said. Last month Leonard Green & Partners said it was evaluating whether to buy BJ's, the third-largest U.S. wholesale club retailer, Reuters reported.

Earlier this month Goldman Sachs upgraded BJ's from Neutral to Buy and added it to its Conviction List, saying earnings growth should accelerate. Goldman also said there was at least a one-in-three chance the company would be sold this year.

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BB&T Corp. (NYSE:BBT) and PNC Financial Services Group Inc. (NYSE:PNC) are among lenders that have shown interest in buying Royal Bank of Canada (NYSE:RY)'s U.S. consumer bank, two people with knowledge of the matter told Bloomberg.

Royal Bank, which put the money-losing RBC Bank unit up for sale this year, is seeking to sell the business for stock rather than cash, said the people, who spoke on condition of anonymity because the talks are private.

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General Electric Co (NYSE:GE) is among the bidders for Switzerland-based smart metering company Landis+Gyr in an auction that could fetch as much as $2 billion, four people familiar with the matter told Reuters.

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Ad group Havas (OTCPK:HAVSF) is seeking acquisitions in emerging countries, digital and mobile marketing in a bid to increase revenue by a billion euros in the coming years, its new chief executive told Reuters.

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RANSquawk reports rumors that Gen-Probe (NASDAQ:GPRO) has engaged Morgan Stanley (NYSE:MS) to seek buyers for the medical diagnostic company.

Sources: Alacra Pulse, Bloomberg, Reuters, New York Times DealBook, ETF Trends, RANsquawk