Exelon-PSEG Deal Is Dead

Newark Star Ledger:

Exelon yesterday walked away from its $17 billion acquisition of Public Service Enterprise Group, balking at concessions sought by New Jersey regulators.

After the stock market closed, Exelon of Chicago and PSEG of Newark announced they were terminating the transaction, ending more than 20 months of arduous efforts to create what would have been the largest electrical power supplier in the country.

This is bad news for PSE&G:

Moody's Investor Service said on Friday that it changed its rating outlook for the debt of Public Service Enterprise Group Inc. and its regulated utility unit, Public Service Electric & Gas, to negative from stable following the dissolution of the company's agreement to be acquired by Exelon.

Moody's said the change reflects the rating agency's concern that during the nearly two years the Exelon deal was pending, PSE&G's requests to regulators for higher electric and gas rates went unresolved, 'resulting in a growing need for rate relief to recover increased costs.' Moody's also had viewed an acquisition by Exelon as 'moderately favorable' for the parent company's credit quality.