By Michael Erman
NEW YORK (Reuters) - U.S. power company Exelon Corp (EXC.N) is near a $7.7 billion stock deal to buy rival Constellation Energy Group Inc (CEG.N), the latest in a series of power deals in the consolidating utility industry, sources familiar with the matter said on Wednesday.
Under the terms of the deal, which could be announced as early as Thursday, Constellation shareholders would receive 0.93 Exelon shares for each Constellation share, two of the sources said.
At Wednesday's close, the bid was worth about $38.59 a share -- a 12.5 percent premium to Constellation's closing share price of $34.30.
Constellation's shares rose 9.3 percent after hours on the buyout talks, after already rising 4.2 percent over the course of the day.
Exelon's market value at the end of trading on Wednesday was nearly $27.5 billion.
On a conference call earlier on Wednesday, Exelon Chief Executive John Rowe declined to comment on the merits of a possible tie-up with Constellation.
But, commenting more broadly, Rowe said, "Consolidation makes sense in this industry and is essential in this industry. We always look and we are as cold-blooded as we can be when it comes down to the economics."
Exelon is one of the largest U.S. utilities and the largest U.S. nuclear power company. The company has the capacity to generate nearly 32,000 megawatts of power and serves approximately 5.4 million customers in northern Illinois and southern Pennsylvania.
Constellation owns 12,000 megawatts of generating capacity and serves more than 1.2 million customers through its Baltimore Gas & Electric utility. It holds just more than half of a joint venture with France's EDF (EDF.PA) that owns five nuclear reactors.
Both companies have significant unregulated businesses, and derive most of their earnings from these operations.
The deal follows a number of large deals in the U.S. utility industry, including Duke Energy's (DUK.N) $13.7 billion deal for Progress Energy (PGN.N), Northeast Utilities (NU.N) $4.2 billion takeover of NSTAR (NST.N), and AES Corp's (AES.N) $3.5 billion bid for DPL Inc (DPL.N).
Exelon spokesman Paul Elsberg said the company was always looking for opportunities to enhance shareholder value, including mergers and acquisitions. He said the company does not comment on rumors about specific deals.
A Constellation spokesman also declined to comment.
Utility deals in the United States are drawn-out procedures which face tough scrutiny from states and regulators.
Both companies have had high-profile deal failures in the past. Exelon walked away from a $7.7 billion hostile bid for independent power producer NRG Energy Inc (NRG.N) in 2009 and couldn't get a deal for Public Service Enterprise Group past regulators in 2006.
Florida power company FPL Group Inc scrapped a $12.5 billion takeover of Constellation in 2006 after the merger became embroiled in state politics.
Constellation also came close to selling itself to Berkshire Hathaway's (BRKa.N) MidAmerican Energy Holdings Co at the height of the financial crisis in late 2008 for $4.7 billion.
But that deal fell through as Constellation instead agreed to sell nearly half of its nuclear power business to Electricite de France SA (EDF.PA) for $4.5 billion.
Warren Buffett's one-time lieutenant David Sokol was a key figure in pursuing the Constellation deal for the billionaire investor, according to a regulatory filing.
Sokol left Berkshire in March after he bought shares in Lubrizol Corp (LZ.N) before suggesting to Buffett that he buy the company. On Wednesday, Berkshire's audit committee said Sokol had intended to deceive the company and violated Delaware law.
(Additional reporting by Matt Daily and Megan Davies; Editing by Gary Hill, Phil Berlowitz)