NEW YORK (TheStreet) -- Pepco Holdings (POM) stock is soaring after confirmation Exelon Corporation (EXC) has agreed to an acquisition, creating the leading mid-Atlantic electric and gas company. The combined company will serve around 10 million customers with a rate base of approximately $26 billion.
By midafternoon, Pepco shares had spiked 17.4% to $26.76. Trading volume of 56.6 million shares was nearly 22 times its three-month daily average.
Meanwhile, shares of Exelon had slipped -3.8% to $34.81.
In a statement, Exelon said both companies' boards had approved an all-cash transaction. The acquisition will see Pepco common stock purchased for $27.25 a share, a 24.7% premium to its closing price of $21.85 at the end of last week.
"Exelon and Pepco Holdings have a compelling strategic rationale for merging, given our geographic proximity and similar utility business models," said Exelon CEO Chris Crane.
The acquisition, expected to close in the second or third quarter of 2015, will be accretive to Exelon's adjusted earnings in the first full year after closing.
Crane will assume the role of president and CEO for the combined utilities company, while current Pepco CEO Joseph Rigby will remain in his current role until the transaction has closed. Rigby had previously announced his planned retirement.
Barclays, Goldman Sachs and Loop Capital Markets are serving as financial advisors and Kirkland & Ellis is acting as legal counsel to Exelon.
Lazard served as lead financial advisor to Pepco Holdings, Morgan Stanley provided a fairness opinion, while Sullivan & Cromwell and Covington & Burling served as legal counsel.