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Deere to sell wind energy business to Exelon for $900 million
Credit: RTT News, www.rttnews.com 31 August 2010 ~~
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Translate: FROM English | TO English
Farm machine maker Deere & Co. (DE: News ) agreed Tuesday to sell its wind energy business to a subsidiary of Exelon Corp. (EXC: News ) for $900 million.
The initial deal is for $860 million, plus a provision for up to an additional $40 million payment upon commencement of construction on the advanced development projects.
The transaction, which is subject to regulatory approvals, is expected to close before the end of this year.
“As Deere sharpens its own strategic focus, we have concluded that the company’s resources are best invested in growing our core equipment businesses around the world. We have chosen to place the wind portfolio with Exelon in part due to its demonstrated leadership in the energy industry,” Deere’s Chairman and CEO Samuel Allen said in a statement.
Moline, Illinois-based Deere’s wind energy business, John Deere Renewables, LLC, has 36 completed projects in eight states, which has an operational capacity of 735 megawatts, and numerous other wind energy projects in development.
The proposed sale to Exelon’s subsidiary, Exelon Generation Company, LLC, is expected to result in a fourth-quarter charge of about $25 million for Deere, which was not reflected in the earnings guidance provided by the company in mid-August.
Deere had announced in late February that it will review strategic options for its wind energy business and retained Goldman Sachs & Co. as exclusive financial adviser to assist in the initiative.
The deal makes Excelon one of the nation’s largest wind energy generators.
“We expect to see increasing demand for clean, efficient wind power at a national level and in the 29 states that already have a renewable energy standard. This acquisition gives Exelon a strong position in the wind generation business that adds diversity to our generation fleet and provides more options for future growth,” John Rowe, Exelon chairman and CEO noted.
Following the completion of the acquisition, John Deere Wind Energy will become part of the Exelon Power division of Exelon Generation. Exelon already generates more than 1,000 megawatts of owned and contracted renewable power, including hydroelectricity, wind, landfill gas and solar.
DE closed Monday’s regular trading session at $62.98, down $1.50 on a volume of 4.07 million shares, lower than the three-month average volume of 4.73 million shares. In the past 52-week period, the stock has been trading in a range of $40.28 to $69.47.
EXC closed at $40.52, down $0.11 on a volume of 3.07 million shares. In the past 52-week period, the stock has been trading in a range of $16.78 to $52.23.
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