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Juno Beach, Fla.-based energy company FPL Group Inc. agreed Monday to buy Constellation Energy Group Inc. of Baltimore, Md., for about $11 billion in stock, to create the second-largest electricity company in the United States. The two companies said in a joint statement the stock swap will create a company to be called Constellation Energy with a market capitalization of $28 billion, and will be 60 percent owned by current shareholders of FPL. The terms of the deal call for Constellation shareholders to receive 1.444 shares in the new company for each share they now own, while FPL shareholders are to swap their shares on a one-for-one basis. The statement says price reflects a 15 percent premium to the Constellation share price in the past 20 trading days; however, the stock has risen about 20 percent in the past three weeks, so there is virtually no premium over the $61.62 a share closing price Friday, which gives Constellation a market cap of about $11 billion. Both boards have approved the deal, which is expected to add to earnings per share for both companies in the first year. FPL president, chairman and chief executive Lewis Hay will become chief executive of the new company, while his Constellation counterpart Mayo A. Shattuck III will become chairman. FPL will name nine of the 15 board members. Merrill Lynch is advising FPL, whose board has received a fairness opinion from Lehman Brothers. FPL’s lawyers are Cravath, Swaine & Moore and Skadden, Arps, Slate, Meagher & Flom. Constellation is being advised by Morgan Stanley and receiving a fairness opinion from Goldman Sachs. Its legal adviser is Kirkland & Ellis. Copyright �2005 TDD, LLC. All rights reserved.

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