Rigrodsky & Long, P.A. Appointed Co-Lead Counsel in Class Action Against Constellation Energy Group, Inc. Over its Sale to Exelon Corporation

Rigrodsky & Long, P.A. Appointed Co-Lead Counsel in Class Action Against Constellation Energy Group, Inc. Over its Sale to Exelon Corporation

On June 1, 2011, the Honorable Audrey J.S. Carrion of the Circuit Court for Baltimore City, Maryland issued an Order appointing Rigrodsky & Long, P.A. as Co-Lead Counsel in In re Constellation Energy Group, Inc. Shareholder Litigation, Case No. 24-C-11-00315.

Plaintiffs brought this action derivatively and on behalf of the public shareholders of Constellation Energy Group, Inc. (“Constellation” or the “Company”) against Constellation and its Board of Directors (the “Board” or “Individual Defendants”) to enjoin a proposed transaction announced on April 28, 2011 (the “Proposed Transaction”), pursuant to which Constellation will be merged with and into Bolt Acquisition Corporation, a wholly-owned subsidiary of Exelon Corporation (collectively, “Exelon”).  On or about April 28, 2011, the Individual Defendants caused Constellation to enter into an agreement and plan of merger (the “Merger Agreement”) to be acquired by Exelon in an all-stock transaction.  Pursuant to the Merger Agreement, Constellation shareholders will receive 0.930 shares of Exelon common stock in exchange for each share of Constellation common stock they own (the “Exchange Ratio”).  Based on Exelon’s closing share price on April 27, 2011, Constellation shareholders will receive a value of $38.59 per share, or approximately $7.9 billion in total equity value for their Constellation shares.

Plaintiffs alleged that the Proposed Transaction is the product of a flawed process that resulted in the Board’s failure to maximize shareholder value in violation of their fiduciary duties, which will deprive Constellation’s public shareholders of the ability to participate in the Company’s long-term prospects.  Plaintiffs sought to enjoin the Proposed Transaction or, alternatively, to rescind the Proposed Transaction in the event defendants were able to consummate it.

Plaintiffs further alleged that to advance its goal of securing the Proposed Transaction and the promise of lucrative post-merger employment, the Board further breached its fiduciary duties by agreeing to preclusive deal protection devices in connection with the Merger Agreement.  These provisions, which collectively preclude any competing offers for the Company, include: (i) a no-solicitation provision prohibiting the Company from properly shopping itself; (ii) a termination fee payable by the Company to Exelon of $200 million if Constellation is to accept a competing bid; and (iii) a five business day matching rights period during which Exelon can match any superior proposal received the Company.

Additionally, on June 27, 2011, in an attempt to secure shareholder approval of the Proposed Transaction, plaintiffs alleged that defendants issued a materially false and misleading Form S-4 Registration Statement (the “S-4″) with the SEC.  The S-4, which recommends that Constellation shareholders vote in favor of the Proposed Transaction, omitted and/or misrepresented material information concerning, among other things: (i) the unfair sales process employed by defendants to sell the Company to Exelon and only Exelon; (ii) Constellation’s and Exelon’s financial forecasts; and (iii) the key inputs and assumptions underlying the fairness opinions provided by Constellation’s financial advisors, Morgan Stanley & Co. Incorporated (“Morgan Stanley”) and Goldman, Sachs & Co. (“Goldman Sachs”), as well as Exelon’s financial advisors, Barclays Capital Inc. (“Barclays”), J.P. Morgan Securities, LLC (“J.P. Morgan”), and Evercore Group, L.L.C. (“Evercore”).  Because of these omissions and misstatements, plaintiffs contended that shareholders simply cannot make a fully informed decision as to whether to vote their shares in favor of the Proposed Transaction.