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Exelon Mulls Separating Nonutility Assets

Exelon is looking at separating its nonutility assets from the rest of the Chicago utility giant, a media report says.
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Exelon  (EXC) - Get Exelon Corporation Report is looking at separating its nonutility assets from the rest of the Chicago utility giant, a media report says.

Exelon’s share price recently stood at $41.45, up 3.7%. It eased 12% year to date through Monday.

The New York activist investor Corvex Management last week urged a separation for Exelon, saying that could help its share price reach $60.

Chicago-based Exelon is working with advisers to assess the split-up idea, and no final determination has been reached, sources told Bloomberg. 

In addition to its six regulated utilities, Exelon has 21 nuclear plants and some solar, wind and natural-gas assets.

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“As we most recently communicated on our second-quarter earnings call, we regularly review our corporate structure and overall mix of businesses to determine how to best create value and position our businesses for success,” William Gibbons, an Exelon spokesman, said in a statement.

There’s a trend of power companies divesting unregulated assets to concentrate on utilities, as investors like the more focused businesses, Bloomberg notes.

Morningstar analyst Andrew Bischof in August offered a mixed take on Exelon and put fair value for the stock at $41.

“As the largest nuclear power plant owner in the United States, Exelon has suffered as low natural gas prices have slashed power prices. 

"We think cheap gas will remain an advantage for competing generators and pressure nuclear plant returns for the foreseeable future,” he wrote.

“But Exelon has shown its political clout, winning price subsidies in Illinois, New York, and New Jersey to keep most of its nuclear fleet running.”

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