EXHIBIT
99.1
Contacts:
|
FPL
Group, Inc.
|
Constellation
Energy
|
|
Media:
Mary Lou Kromer, 305-552-3888
|
Media:
Robert Gould, 410-234-7433
|
|
Investors:
Jim von Riesemann, 561-694-4697
|
Investors:
Kevin Hadlock, 410-783-3647
|
FPL
Group and Constellation Energy to Merge,
Creating
Nation’s Largest Competitive Energy Supplier
and
Its Second-largest Electric Utility
—$28
Billion Transaction Expected to be Immediately Accretive
to
Earnings, Will Create a FORTUNE 100 Company—
JUNO
BEACH, Fla. and BALTIMORE, Md., December 19, 2005
- FPL
Group, Inc. (NYSE: FPL) and Constellation Energy (NYSE: CEG), two of the
strongest, fastest-growing and most successful energy companies in America,
today announced that they have signed a definitive agreement to create the
nation’s largest competitive energy supplier and its second-largest electric
utility portfolio.
The
transaction will create a company with a market capitalization of approximately
$28 billion (based on current market values), combined annual revenues of $27
billion, and $57 billion in total assets. The combined company will be named
Constellation Energy.
Under
the
definitive merger agreement, which was unanimously approved by both companies’
boards of directors, each common share of Constellation Energy outstanding
immediately prior to the merger will be converted into 1.444 common shares
of
Constellation Energy at the time of the merger, and each common share of FPL
Group outstanding immediately prior to the merger will be converted into one
share of Constellation Energy at the time of the merger. This represents a
premium to Constellation Energy shareholders of approximately 15 percent based
on the exchange ratio calculated using the average of the 20-day closing prices
for both companies
2
ending
December 13, 2005. Upon consummation of the merger, FPL Group shareholders
will
own approximately 60 percent, and Constellation Energy’s shareholders will own
approximately 40 percent of the combined company. Based on both companies'
previously communicated earnings expectations, the transaction is expected
to be
accretive to both companies in the first full year of combined operations,
excluding transaction and integration costs and the positive effects of purchase
accounting.
The
combined company will maintain dual headquarters in Juno Beach, Fla., and
Baltimore. It will have approximately 21,750 employees and will serve more
than
5.5 million electric customers in Florida and Maryland and 625,000 gas customers
in Maryland. Its competitive wholesale and retail businesses will serve
thousands of commercial, industrial and utility customers, including 72 of
the
FORTUNE 100 companies. Its generation portfolio will be the nation’s largest,
exceeding 45,000 megawatts of capacity. It will be the third-largest nuclear
plant operator in the United States, owning and operating seven nuclear power
stations with eleven units, including FPL Group's pending acquisition of the
Duane Arnold nuclear station.
Lewis
Hay, III, currently chairman, president and chief executive officer of FPL
Group, will become chief executive officer of Constellation Energy. Mayo
A. Shattuck III, currently chairman, president and chief executive officer
of
Constellation Energy, will become chairman of the board of Constellation Energy
upon completion of the merger and will also head the combined company’s
competitive energy business. The Constellation Energy board will be composed
of
15 members, nine of whom will be named by FPL Group, and six of whom will be
named by Constellation Energy. Thirteen of the company’s board members will be
non-executive directors.
3
“This
historic transaction will create growth potential for the combined enterprise
that exceeds what our two companies could have achieved separately,” said Hay.
“It brings together two strong, successful industry leaders with extensive and
complementary assets and skill sets, combining the best of the regulated utility
and competitive energy sectors. This combination will create the premier
competitive energy company with the critical mass and requisite skills across
the competitive energy value chain. We also will have the second-largest and
one
of the fastest-growing electric utility businesses in the nation. All of this
will be supported by the strongest balance sheet among our industry
peers.”
“The
strategic combination of these two great companies will bring out the best
in
each, in ways that will drive major gains in growth, productivity and efficiency
and build upon both companies' proven track record of creating shareholder
value,” said Shattuck. “We will build scale in our generation fleet by more than
doubling our competitive generation assets and will leverage that increased
scale with our customer-facing businesses and world-class risk management.
Most
importantly, we are creating an enterprise extraordinarily well positioned
to
create shareholder value by seizing growth opportunities with our unique
combination of people, assets, strategic vision and financial strength.”
Two
Proven Winners Become Stronger as a Team
Both
FPL
Group and Constellation Energy have delivered shareholder value outpacing both
the Dow Jones Electric Index and the S&P 500 since year-end 2001. FPL Group
has provided total shareholder returns of about 77 percent since year-end 2001,
and
4
Constellation
Energy has provided total returns of more than 160 percent over the same
period.
The
management teams of each company have distinguished themselves as visionary
industry leaders, simultaneously driving both innovation and cost-saving
efficiencies. For example, FPL Group is the leader in wind power, and it
operates one of the most cost-efficient electric utilities in the nation that
also ranks high in service reliability. Constellation Energy’s risk management,
commodity and retail expertise as well as its generation platform have helped
to
propel and redefine the competitive power sector, and its regulated utility,
Baltimore Gas and Electric Company (BGE), is also in the top decile in cost
efficiency.
Extending
the lead in competitive energy markets
With
this
transaction, the two companies are building an entity that will be uniquely
positioned for success in competitive energy markets. Constellation Energy
is
the established leader in wholesale and retail competitive power supply, serving
a combined customer peak load of more than 35,000 megawatts. FPL Energy brings
an industry-leading and rapidly growing renewable energy platform and a
diversified, high-performing portfolio of nearly 12,500 megawatts of capacity
that more than doubles Constellation Energy’s equally diversified and
high-performing generation fleet, which totals nearly 12,000
megawatts.
The
combination creates a more balanced footprint in major competitive regions
-
particularly in New England and Texas, where FPL Energy’s competitive generation
assets will be leveraged by Constellation Energy’s current position as the
leading supplier of energy in competitive regions across North America. This
presents an important competitive advantage. It is expected that by more
closely
5
matching
its power sales with the output of its own larger power plant fleet, essentially
creating a "virtual utility," the combined company can lower operating costs
and
be even more successful in growing earnings.
Further
planned additions to the combined company’s 3,200-megawatt wind energy
portfolio, coupled with the ability to market associated renewable energy
credits and green tags effectively through the competitive retail business,
will
also drive revenue growth.
The
nation’s premier regulated utility business
While
most of the value created by the transaction is expected to come from the
combination of the companies’ competitive energy businesses, customers and
shareholders are expected to benefit from the alliance of two top
utilities.
Pairing
Florida Power & Light and BGE will create a stronger and more diversified
regulated utility business. This business will contribute approximately half
of
the combined company’s earnings, providing a strong, balanced base on which to
build.
Florida
Power & Light serves one of the fastest-growing areas in the nation. It is
one of the most cost-efficient utilities in the country, also ranking high
in
service reliability. BGE, the nation's oldest utility, also has a strong
reputation and customer service track record. The two utilities will continue
to
operate independently, and each will retain its respective company name.
By
capitalizing on the scale of the two operations and leveraging best practices
of
both companies, Florida Power & Light and BGE will have added opportunity to
better serve customers and assist each other in the event of natural disasters.
In addition, Florida Power & Light can tap into Constellation Energy’s coal
technology and
6
experience
as it evaluates alternatives to meet the rapidly rising demand in Florida and
the need to further diversity its fuel mix.
A
more diverse and balanced fuel mix
The
combination of the two generation fleets will result in a more balanced fuel
mix
and a broader geographic territory, thus improving load-serving capabilities.
FPL Group’s fuel mix, which is primarily oil and natural gas (73 percent),
nuclear (13 percent) and wind (10 percent), complements Constellation Energy’s
fuel mix, which is primarily oil and natural gas (41 percent), nuclear (32
percent) and coal (23 percent). Combining their respective fleets is expected
to
reduce fuel risk exposure and increase purchasing power. FPL Group currently
is
one of the largest consumers of natural gas in the United States, a position
that can be leveraged by the combined company as it builds upon Constellation
Energy’s efforts to expand in the natural gas sector.
Enhanced
nuclear expertise
Each
company has established itself as a leading nuclear operator and combining
the
fleets offers significant potential for increased savings and efficiencies.
FPL
Group operates five nuclear power units in Florida and New Hampshire and expects
to soon complete the acquisition of a majority ownership of the Duane Arnold
nuclear power unit in Iowa. Constellation Energy operates five nuclear power
units in Maryland and New York. Both companies have a stated growth and
consolidation strategy in the nuclear arena. Reflecting that strategy, five
of
the seven nuclear units sold in the United States since 2001 were acquired
by
FPL Group or Constellation Energy. The combined nuclear fleet brings an
increased depth of resources and talent and provides a larger foundation to
pursue continued nuclear
7
consolidation
and potentially develop a new nuclear program, as market conditions warrant.
The
combination also provides added opportunity to realize cost synergies through
a
fleet management approach.
Environmental
and community benefits
Both
companies are leading utilities with a track record of high reliability,
award-winning customer service and environmental stewardship. FPL Group was
the
highest-ranked U.S. utility in a World Wildlife Fund report that analyzed 72
of
the world’s leading power companies on current use of available technologies to
reduce carbon dioxide emissions. By adding cleaner and more efficient generating
sources over the past several years, FPL Group’s emissions rates of sulfur
dioxide, nitrogen oxide and carbon dioxide have continued to decline -
solidifying its position as one of the cleanest electric generating companies
in
the nation.
Constellation
Energy has also won numerous environmental awards and since 1999 has invested
approximately $250 million in Maryland on emissions-reducing equipment and
upgrades. Constellation Energy indicated earlier this year that it expects
to
spend $500 million to $600 million on additional air pollution emission controls
in Maryland through the end of the decade, which will result in significant
reductions in emissions of sulfur dioxide, nitrogen oxides and mercury.
Each
company has committed to maintain co-headquarters in Juno Beach, where the
company’s fossil and renewable generation operations will be based, and in
Baltimore, where the company's competitive energy businesses will be located.
The two utilities will continue to be headquartered in their respective cities.
Shattuck and Hay have committed to continue the strong corporate
citizenship
8
activities
and philanthropic contributions in the communities their companies serve at
levels equal to or greater than they have in the past.
Significant
Synergies
The
merger offers both strategic and financial advantages in serving the energy
marketplace. The combination is expected to generate at least $200 million
to
$250 million pre-tax of annual synergies available to shareholders before
integration-related costs by the end of the third post-merger year. The majority
of these synergies are expected to come from the company's deregulated
operations. These synergies are expected to result from consolidation of
non-regulated business unit operations, sharing of best practices, improved
procurement strategies, and consolidation of systems and support
activities.
Continued
financial strength and discipline
Both
management teams understand the importance of a strong balance sheet as a
competitive priority in a rapidly changing industry. Both teams have strong
track records of supporting their business strategies with adequate
capitalization and being disciplined in their financing of new activities.
Based
on their own analyses, both companies believe that Constellation Energy and
its
subsidiaries will have strong investment grade ratings following the closing
of
this transaction. Both teams are committed to maintaining a strong credit
rating.
Dividend
It
is
anticipated that the new company's dividend will be the same as that of FPL
Group immediately prior to completion of the merger.
9
Approvals
and Timing
The
merger is conditioned upon approval by the shareholders of both companies,
expiration or early termination of the applicable Hart-Scott-Rodino waiting
period, and the approval of various state and federal regulatory authorities,
including the Maryland Public Service Commission, the Federal Energy Regulatory
Commission (FERC), and the Nuclear Regulatory Commission (NRC). The merger
agreement contains other customary closing conditions. The companies are
targeting the receipt of all necessary regulatory approvals in 9 to 12 months
and they currently intend to seek shareholder approval in the second quarter
of
2006.
Advisors
Merrill
Lynch is serving as financial advisor to FPL Group, and Morgan Stanley is
serving as financial advisor to Constellation Energy. Cravath, Swaine &
Moore LLP is serving as transaction counsel to FPL Group, and Kirkland &
Ellis LLP is serving as transaction and regulatory counsel to Constellation
Energy. Skadden, Arps, Slate, Meagher & Flom LLP is serving as
regulatory counsel to FPL Group. Lehman Brothers has provided a fairness opinion
to FPL Group’s board of directors and Goldman Sachs has provided a fairness
opinion to Constellation Energy’s board of directors.
Investment
Community Meeting and Webcast
Constellation
Energy and FPL Group will hold an investment community meeting at the
Waldorf-Astoria Hotel, 301 Park Avenue, New York, NY, in the Starlight Roof
Ballroom, 18th
Floor, today, December 19, beginning at 9:00 AM EST. For those unable
to
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participate
in person, the meeting will also be webcast; it can be accessed through the
FPL
Group-Constellation Energy merger website at www.newenergyleader.com.
A
limited number of phone lines have also been reserved for members of the
investment community; the dial-in number for the call will be (888) 802-8577
(domestic) or (973) 935-2981 (international). Participants should reference
passcode 6849782.
A
telephonic replay of the meeting will be available until January, 13,
2006. The replay numbers are (877) 519-4471 (domestic) and (973) 341-3080
(international). The passcode is 6849782.
Telephonic
Media Press Conference
In
addition, a telephonic media press conference will be held today at 11:00 AM
EST; members of the media are invited to participate by dialing 800-322-0079
(domestic) or 973-935-2100 (international) and reference passcode
6849831.
Note
to Broadcast Media
Video
footage of the two CEOs discussing the transaction, as well as B-Roll on the
two
companies will be available today at the following times and satellite
coordinates. The
details for the downlink are as follows:
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FEED
DATE:
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MONDAY,
DECEMBER 19, 2005
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FEED
TIME:
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7:30-7:45
AM ET (DEDICATED)
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COORDINATES:
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C
BAND: AMC 3(C)/TRANSPONDER 3/AUDIO 6.2 & 6.8
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DL:
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3760
(H)
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RE-FEED
DATE:
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MONDAY,
DECEMBER 19, 2005
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RE-FEED
TIME:
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10:00-
10:30 AM ET (FED IN ROTATION)
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COORDINATES:
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C
BAND: IA (formerly Telstar) 5(C)/TRANSPONDER 19/AUDIO 6.2 & 6.8
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DL:
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4080
(V)
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RE-FEED
DATE:
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MONDAY,
DECEMBER 19, 2005
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RE-FEED
TIME:
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1:30-2:00
PM ET (FED IN ROTATION)
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COORDINATES:
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C
BAND: IA (formerly Telstar) 5 (C)/TRANSPONDER 19/AUDIO 6.2 &
6.8
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DL:
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4080
(V)
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Corporate Profiles
Constellation
Energy (http://www.constellation.com), a FORTUNE 200 company based in Baltimore,
is the nation's largest competitive supplier of electricity to large commercial
and industrial customers and the nation's largest wholesale power seller.
Constellation Energy also manages fuels and energy services on behalf of
energy-intensive industries and utilities. It owns a diversified fleet of more
than 100 generating units located throughout the United States, totaling
approximately 12,000 megawatts of generating capacity. The company delivers
electricity and natural gas through the Baltimore Gas and Electric Company
(BGE), its regulated utility in Central Maryland. For the trailing 12-months
as
of Sept. 30, 2005, the combined revenues of the integrated energy company
totaled $15.2 billion.
FPL
Group, with revenues for the trailing 12-months as of Sept. 30, 2005 of more
than $11 billion, is nationally known as a high quality, efficient, and
customer-driven organization focused on energy-related products and services.
With a growing presence in 26 states, it is widely recognized as one of the
country's premier power companies. Its principal subsidiary, Florida Power
&
Light Company, serves 4.3 million customer accounts in Florida. FPL Energy,
LLC,
an FPL Group wholesale electricity generating subsidiary, is a leader in
producing electricity from clean and renewable fuels. Additional information
is
available on the Internet at www.FPLGroup.com, www.FPL.com and
www.FPLEnergy.com.
12
Additional
Information
This
communication is not a solicitation of a proxy from any security holder of
FPL
Group Inc. or Constellation Energy. Constellation Energy intends to file with
the Securities and Exchange Commission a registration statement that will
include the joint proxy statement/prospectus of Constellation Energy and FPL
Group and other relevant documents to be mailed to security holders in
connection with the proposed transaction. WE URGE INVESTORS TO READ THE JOINT
PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS WHEN THEY BECOME
AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT FPL GROUP,
INC.
CONSTELLATION ENERGY AND THE PROPOSED TRANSACTION. A definitive proxy
statement will be sent to security holders of FPL Group and Constellation Energy
seeking approval of the proposed transaction. Investors and security holders
will be able to obtain these materials (when they are available) and other
documents filed with the SEC free of charge at the SEC's website,
www.sec.gov
.
In addition, a copy of the joint proxy statement/prospectus (when it becomes
available) may be obtained free of charge from FPL Group (700 Universe Blvd.,
Juno Beach, FL 33158, Attention Investor Relations), or from Constellation
Energy, Shareholder Services, 750 East Pratt St., Baltimore, Md.
21202.
This
communication shall not constitute an offer to sell or the solicitation of
an
offer to buy any securities, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such
jurisdiction. No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities Act of
1933,
as amended.
13
FPL
Group, Constellation Energy and their respective directors and executive
officers and other persons may be deemed to be participants in the solicitation
of proxies in respect of the proposed transaction. Information regarding FPL
Group’s directors and executive officers is available in its proxy statement
filed with the SEC by FPL Group on April 5, 2005, and information regarding
Constellation Energy’s directors and executive officers is available in its
proxy statement filed with the SEC by Constellation Energy on April 13, 2005.
Information regarding J. Brian Ferguson, a director of FPL Group elected since
the date of the filing of the 2005 definitive proxy statement, can be found
in
the Company’s filing on Form 10-Q dated August 4, 2005. Other information
regarding the participants in the proxy solicitation and a description of their
direct and indirect interests, by security holdings or otherwise, will be
contained in the joint proxy statement/prospectus and other relevant materials
to be filed with the SEC when they become available.
This
document includes “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements
include, for example, statements regarding benefits of the proposed merger,
the
likelihood and timing of closing of the proposed merger, integration plans
and
expected synergies, anticipated future financial and operating performance
and
results, including estimates for growth. Any statements that express, or involve
discussions as to, expectations, beliefs, plans, objectives, assumptions or
future events or performance (often, but not always, through the use of words
or
phrases such as “will likely result”, “are expected to”, “will continue”, “is
anticipated”, “believe”, “could”, “estimated”, “may”, “plan”, “potential”,
“projection”, “target”, “outlook”) are not statement of historical facts and may
be forward-
14
looking.
There are a number of risks and uncertainties that could cause actual
results to differ materially from the forward-looking statements made
herein. These risks and uncertainties include, for example, the ability to
obtain governmental approvals of the transaction on the proposed terms and
schedule; the failure of FPL Group or Constellation Energy stockholders to
approve the transaction; the risk that the businesses will not be integrated
successfully or that anticipated synergies will not be achieved or will take
longer to achieve than expected; disruption from the transaction making it
more
difficult to maintain relationships with customers, employees, suppliers or
governmental entities; unexpected transaction costs or liabilities; economic
conditions; and other specific factors discussed in documents filed with the
Securities and Exchange Commission by both FPL Group and Constellation Energy.
These risks, as well as other risks associated with the merger, will be more
fully discussed in the joint proxy statement/prospectus that will be included
in
the Registration Statement on Form S-4 that Constellation Energy will file
with
the SEC in connection with the proposed merger. Additional factors that
may affect the future results of FPL Group or Constellation Energy are set
forth
in their respective filings with the SEC. Investors and security holders may
obtain free copies of these documents at the SEC’s web site at www.sec.gov. In
addition, investors and security holders may obtain free copies of the documents
filed with the SEC by FPL Group at www.fplgroup.com/investor. Investors and
security holders may obtain free copies of the documents filed by Constellation
Energy at www.constellation.com/investors. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of
the
date of this document. Neither FPL Group nor Constellation Energy
undertakes any obligation to update its forward-looking
15
statements
to reflect events or circumstances after the date of this
document.