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Exelon announces benefits of proposed acquisition

There are many ways for New Jersey companies to grow. They can grow slowly over time as they accumulate more customers and more assets. Or, they can grow more quickly by merging with an established company. Through a merger or acquisition, companies can get access to capital, customers and technology that they would otherwise not be privy to. This can be a benefit for the company and for the customers the company serves.

Energy giant Exelon Corp. is touting these benefits after proposing an acquisition of Pepco Holdings -- another energy provider that serves many in New Jersey. The company has proposed a $6.8 billion deal that could close by late next year. In the deal, Exelon would pay Pepco shareholders more than 25 percent premium on late April stock prices -- $27.25 a share. Executives claim that this acquisition would increase capital, technology and would benefit Pepco consumers as the company moves into a new market.

However, this acquisition is far from guaranteed. In many industries, including the energy sector, federal regulators will have the final say about whether this deal will be closed or not. The government is worried about certain companies becoming too large and having too much control over a particular area. In the past, proposed acquisitions by Exelon have been denied by federal regulators. However, since the recession, many realize that the influx of capital -- for infrastructure improvements -- into smaller markets has become a necessity.

While not all New Jersey companies will be undertaking billion dollar deals, every acquisition should be treated with care. Business owners need to understand the legal complexities that are required to undertake a successful merger or acquisition. With the right help, businesses can grow through the proper use of this important corporate strategy.

Source: Forbes, "Exelon Touts Benefits For Customers In Buying Pepco, But Regulators Will Scrutinize," Ken Silverstein, May 1, 2014

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