NEW YORK -(Dow Jones)- Calpine Corp. (CPN) will pay Pepco Holdings Inc. (POM) $1.65 billion for a fleet of power plants as Calpine expands into the Mid- Atlantic region, while Pepco exits the market-rate power business.
The deal is in line with the company's strategy to build its presence in the mid-Atlantic states, Calpine said. For its part, Pepco, the Washington power provider, said it expects to sell certain additional contracts and assets related to Conectiv within the next 12 months.
Calpine introduced 2011 guidance on Wednesday; it expects adjusted earnings before interest, taxes, depreciation and amortization including the Conectiv acquisition of $1.685 billion to $1.885 billion and adjusted free cash flow of $ 365 million to $565 million.
In all, the move, which enables Pepco /quotes/comstock/13*!pom/quotes/nls/pom (POM 16.74, +0.11, +0.66%) to exit the merchant-power business and positions it as a regulated utility company, is expected to generate about $2 billion of funds for the company.
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