Baltimore Gas and Electric Co. (BG&E) on September 25 announced that it would acquire Potomac Electric Power Co. (PEPCO) for $2.9 billion, creating an as-yet unnamed company with assets exceeding $15 billion, and annual revenues of about $5 billion. The new company will be one of the 10 largest electric utilities in the nation, with 1.8 million electric customers and 530,000 natural gas customers.
BG&E shareholders will receive one share of stock in the new utility for each share of common stock. PEPCO stockholders will receive .997 share for each share. The new company will adopt BG&E's dividend policy, and the annual dividend at the expected 1997 closing date will be $1.67 per share. The present BG&E dividend is $1.56 per share; PEPCO's is $1.66.
Present chairman and CEO of PEPCO, Edward F. Mitchell, will take over as chairman. BG&E chairman and CEO Christian H. Poindexter will succeed Mitchell as CEO one year after the merger takes place. John M. Derrick, Jr., PEPCO president, will become president and COO of the new company, with responsibility for day-to-day operations.
The companies expect merger savings of about $1.3 billion over a 10-year period. Total employee reductions will amount to about 10 percent of the combined workforce.
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