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April 27, 2011

Is Shattuck trying to sell Constellation -- again?

Mayo Shattuck was an investment banker before he was an electricity executive. I always figured he would sell Constellation Energy, parent of Baltimore Gas & Electric, before he was through with it. In 2006 he was trying to seal a deal to sell Constellation to Florida-based FPL Group, but it petered out amid that year's brouhaha over BGE's 72 percent rate increase.

Now he may be at it again. There is been building speculation in recent weeks that Constellation, whose stock price had lagged since its near-bankruptcy during the 2008 financial crisis, would seek a deal with another big energy company. Several news outlets are reporting tonight that the company is close to an agreement with Chicago-based Exelon. This from Bloomberg:

Exelon Corp. (EXC) is near an agreement to buy Constellation Energy Group Inc. (CEG) in a stock deal that values the company at about $7.7 billion, according to a person with knowledge of the matter.

The offer values Constellation at more than $38.50 a share based on Exelon’s closing stock price today, said the person, who declined to be identified because the talks are private.

In the plan under discussion, Constellation Chief Executive Officer Mayo Shattuck would become chairman of the combined company, and Chris Crane, currently the president of Exelon, would become chief executive officer, succeeding Rowe, the person said. The talks started last year, the person said.

Constellation is by far the largest Baltimore-based company, an outgrowth of BGE, which was the nation's first natural-gas utility in the 1800s. Unclear what exactly this deal might mean for Constellation and its Baltimore workforce, but it's probably not good. However much of the company's employment is tied to BGE, the local utility, and can't be moved or downsized.

UPDATE: Here's a March 14 column: Stock price may push Shattuck to sell Constellation

Posted by Jay Hancock at 8:49 PM | | Comments (10)
Categories: BGE/electricity
        

Comments

Mayo seems to care more for himself than for Baltimore. The storied Alex. Brown and Sons? Sold to line his pockets. And now the same goes for Constellation. How many hometown jobs has this guy cost us? And how many more will he sacrifice? I don't understand how he can go out in public without being lambasted by every passer-by. The passing of Don Schaefer only serves to put Mayo's dirty deeds in sharp contrast. Nobody will line up for his funeral but his banker.

Jay, this is all really a grand scheme he came up with to annoy you by taking you away from having a few days off.

When you come back it will all just keep blowing right through like a summer storm.

Mr. R: If annoyance was their plan, it worked! JH

It's all about the next thing with a guy like that. I wonder how many rank and file people @ BGE/Constellation had too much company stock in their retirement accounts back in 2008. I doubt they have any warm and fuzzy feelings toward him. Now a bunch of them will be out of work in their new role of contributing to the synergy aspect of the transaction.

CEG has always been "the biggest small company" when it came to energy companies - to big to stay a small player but much to small and without the finances to effectively grow. It hurt them when they tried the trading route and has continually hurt them when trying to buy or build new generation. This is business and is needed to grow going forward. The FPL deal would have been great (nearly double the price paid for CEG) but was killed by the state. Hopefully the state and others will look objectively at the deal this time. As a UniStar employee who watched CEG pull away and someone with hundreds of friends at CEG who could be impacted, it is hard to be objective but a necessity. Business is business and this deal may be what is needed to continue the growth CEG started and and provide a stronger backing to BGE. Rule of business - big companies expand and grow, small companies join bigger ones for the same purpose. Remember, CEG is a business. BGE is a public utility, but the rest of the company is a business as much as Best Buy, Nike, or even the Sun. Lets examine the deal and see if it makes business sense for the business.

Great move! Exelon is a much better run company

Maybe the PSC will stop this deal too. Isn't there someway this clown can be run out of town before he give it all away for his own grtification? He is a disgrace to our business community.
BTW- his wife a Ravens cheerleader. What a joke.

Shattuck's only and real profession is theft. Like Tony Dearing of the former Rouse Company, he has figured out how to master the art of "change in control". The benefits of this class of thieves lasts only so long. When they pass from this world into the next they will learn the true meaning of "change in control". The shallow life they lead is not to be envied. They have no inner peace, thank God!!

Shattuck's only and real profession is theft. Like Tony Dearing of the former Rouse Company, he has figured out how to master the art of "change in control". The benefits of this class of thieves lasts only so long. When they pass from this world into the next they will learn the true meaning of "change in control". The shallow life they lead is not to be envied. They have no inner peace, thank God!!

I was with BGE/CEG from 1989 until 2009. I lived through the "merger" with PEPCO, the "split" of CEG into 2 separate companies, the "merger" with FPL. None of those deals came to anything and wasted a lot of money (which eventually was taken out of employee pockets), and definitely wasted a lot of employee time. Many of their "real" jobs suffered while they were forced to belong to groups intended to blend companies' systems. All of that was a waste. We did make some nice friends at the other companies though. We'll see what this latest effort comes to.

As an old Alex Brown guy, I knew over time Shattuck would sell. This is what he does best. Make deals.
I will say this, lessons were learned by the Board/Mayo after the FPL deal. The window dressing of all these add-on benefits ($250M?) will help sway public opinion ($100 credits always work) and enable the regulators to let this one go through.

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About Jay Hancock
Jay Hancock has been a financial columnist for The Baltimore Sun since 2001. He has also been The Baltimore Sun's diplomatic correspondent in Washington and its chief economics writer. Before moving to Baltimore in 1994 he worked for The Virginian-Pilot of Norfolk and The Daily Press of Newport News.

His columns appear Tuesdays and Sundays.
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