Duke Energy Corp (DUK), Exelon Corporation (EXC): Are Mergers Worth It?

It’s been a year since Exelon Corporation (NYSE:EXC) merged with Constellation Energy to become the nation’s largest competitive integrated energy provider. Economies of scale can provide a simple solution to maximize margins, but synergies aren’t always what they’re made up to be. Let’s see how this utility’s union is doing.

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Q1 results are in, marking the last quarter before Exelon Corporation (NYSE:EXC) stock put Constellation on its books. At the time of its merger, Exelon Corporation (NYSE:EXC) released a fact sheet comparing the two companies 2011 assets and revenues as a teaser for market share and profits to come:

Source: Exeloncorp.com

According to 2011 statistics, Constellation’s addition would more than double sales, but also increase assets by a substantial 25%.

	Before Merger ($B)	After Merger ($B)	% Increase
Assets	55.1	68.9	25%
Revenue	18.9	38.3	103%

With Q1 results in, here’s how Exelon’s advancements actually stand:Source: Exeloncorp.com, Author’s calculations. Note: 2011 assets and sales

	Q1 2012 Before Merger ($B)	Q1 2013 After Merger ($B)	% Increase
Assets	77.6	78.2	1%
Revenue	4.69	6.89	47%

Source: SEC filings, e*trade.com, author’s calculations

Exelon Corporation (NYSE:EXC)’s March merger was followed close behind by Duke Energy Corp (NYSE:DUK)‘s Progress Energy merger. Another mega move, this merger turned Duke Energy Corp (NYSE:DUK) into the largest U.S. utility by asset class. Not to be left behind, the company produced its own fact-sheet for income-hungry investors:

Source: Duke-energy.com

Compared to Exelon Corporation (NYSE:EXC) stock, Duke’s merger went heavy on assets accumulation and light on revenue gains.

	Before Merger ($B)	After Merger ($B)	% Increase
Assets	57.9	90.6	56%
Revenue	12.7	22.7	79%

Source: Duke-energy.com, author’s calculations. Note: 2010 assets, 2009 sales

With Q1 earnings hot off the press, Duke’s assets have progressed beyond Progress’ projections, but sales haven’t lived up to expectations.

	Q1 2012 Before Merger ($B)	Q1 2013 After Merger ($B)	% Increase
Assets	61.8	113.7	84%
Revenue	3.63	5.89	62%

Source: SEC filings, e*trade.com, author’s calculations.