Filed by FPL Group, Inc.
Pursuant to Rule 425 under the Securities Act of 1933, as amended
and deemed as filed pursuant to Rule 14a-12 under
the Securities Exchange Act of 1934, as amended
Subject Company: FPL Group, Inc.
Commission File Number: 1-8841
Creating the Premier
Competitive Energy Company
Employee Meetings
December 19, 2005
Safe Harbor Language
This presentation includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements include, for example,
statements regarding benefits of the proposed merger,
the likelihood and timing of closing of the proposed merger, integration plans, expected synergies, anticipated future
financial and operating performance and results, including estimates for growth.
Any statements that express, or involve
discussions as to expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not
always, through the use of words or phrases such as “will likely result,” “are
expected to,” “will continue,” “is anticipated,”
“believe,” “could,” “estimated,” “may,” “plan,” “potential,” “projection,” “target,” “outlook”)
are not statements of historical
facts and may be forward-looking. There are a number of risks and uncertainties that could cause actual results to differ
materially from the forward-looking statements made herein. These risks and uncertainties include,
for example, the ability
to obtain governmental approvals of the transaction on the proposed terms and schedule; the failure of FPL Group, Inc.
(FPL Group) or Constellation Energy Group, Inc. (Constellation Energy) stockholders to approve the transaction;
the risk
that the businesses will not be integrated successfully or that anticipated synergies will not be achieved or will take longer
to achieve than expected; disruption from the transaction making it more difficult to maintain relationships with
customers,
employees, suppliers or governmental entities; unexpected transaction costs or liabilities; economic conditions; and other
specific factors discussed in documents filed with the Securities
and Exchange Commission by both FPL Group and
Constellation Energy. These risks, as well as other risks associated with the merger, will be more fully discussed in the
joint proxy statement/prospectus that will be included in the Registration Statement
on Form S-4 that Constellation Energy
will file with the SEC in connection with the proposed merger. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date of this presentation. Neither
Constellation Energy nor
FPL Group undertakes any obligation to publicly release any revision to its forward-looking statements to reflect events or
circumstances after the date of this presentation.
Non-Solicitation
This communication is not a solicitation of a proxy from any security holder of FPL Group, Inc. (“FPL Group”) or
Constellation Energy Group, Inc. (“Constellation Energy”). Constellation
Energy intends to file with the Securities and
Exchange Commission (the “SEC”) a registration statement that will include the joint proxy statement/prospectus of
Constellation Energy and FPL Group and other relevant documents to be mailed
to security holders in connection with the
proposed transaction. WE URGE INVESTORS TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND ANY
OTHER RELEVANT DOCUMENTS WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT FPL
GROUP, CONSTELLATION ENERGY AND THE PROPOSED TRANSACTION. A definitive
proxy statement will be sent to security holders of FPL Group and Constellation Energy seeking approval of the proposed
transaction. Investors will be able to obtain these
materials (when they are available) and other documents filed with the
SEC free of charge at the SEC's website, www.sec.gov. In addition, a copy of the joint proxy statement/prospectus (when it
becomes available) may be obtained free of charge
from FPL Group, 700 Universe Blvd., Juno Beach, FL 33408, Attention:
Investor Relations, or from Constellation Energy, Shareholder Services, 750 East Pratt St., Baltimore, MD 21202.
This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there by
any sale of securities in any jurisdiction in which such offer, solicitation
or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities
Act of 1933, as amended.
FPL Group, Constellation Energy and their respective directors and executive officers and other persons may be deemed to
be participants in the solicitation of proxies in respect of the proposed transaction.
Information regarding FPL Group’s
directors and executive officers is available in the proxy statement filed with the SEC by FPL Group on April 5, 2005, and
information regarding Constellation Energy’s directors and executive officers is available
in its proxy statement filed with the
SEC by Constellation Energy on April 13, 2005. Information regarding J. Brian Ferguson, a director of FPL Group elected
since the date of the filing of the 2005 definitive proxy statement can be found in FPL Group’s
filing on Form 10-Q, dated
August 4, 2005. Other information regarding the participants in the proxy solicitation and a description of their direct and
indirect interests, by security holdings or otherwise, will be contained in the joint proxy statement/prospectus
and other
relevant materials to be filed with the SEC when they become available.
Agenda
What the Combined Company Will Look Like
A Strong Cultural Fit
What the Merger Means for Employees
Next Steps
Questions and Answers
The FPL Group – Constellation Energy
Merger Announcement
Why FPL Group and Constellation are Merging
Build the Leading Platform in the Competitive
Energy Sector
Create a world-class competitive electricity business
Build a Bigger, Stronger, More Diversified
Regulated Utility Business
Build a Combined Enterprise Well-positioned for
Long-term Strength, Growth, Success
….Creating America’s Premier
Energy Company
#2 Regulated Electric Customers (5.5 million)
Creating A New FORTUNE 100 Company And An
Industry Leader
#1 Wholesale Competitive Supplier (22,040 MWs)
#1 Retail Competitive Supplier (16,550 MWs)
#1 U.S. Generation (45,194 MWs)
#1 Wind Generation (3,211 MWs)
#3 Nuclear Generation (8,228 MWs) (1)
(1) Nuclear generation capacity as of 12/5/05 plus 419 MWs for Duane Arnold, which is expected to close by the first quarter 2006
The New Entity: A Unique And Compelling
Combination
The premier competitive energy
provider offering attractive growth
and a balanced, moderate risk
posture…
Wholesale
Retail
Generation
+
+
Florida
Power
& Light
Baltimore
Gas and
Electric
Corporate Strengths & Skills
+
…a solid base of stable, growing
earnings and cash flow…
…built on the strongest balance
sheet in the industry
+
+
A Strong Cultural Fit
Shared Vision on Serving the Customer
FPL: “We will be the preferred provider of safe, reliable, and
cost-effective products and services that satisfy the
electricity related needs of all customer segments.”
BGE: “Our vision is to be the first-choice provider for customers
seeking energy solutions in the complex and changing
energy marketplace.”
Shared Commitment to Helping Employees Achieve
Their Full Potential
Accountability
Teamwork
Meritocracy
Honesty and Candor
Shareholder Value Focus (Stock Price Appreciation)
Two management teams with proven records of
delivering shareholder value
CEG +112%
FPL +52%
S&P 500 +10%
S&P Elec +36%
(50%)
(25%)
0%
25%
50%
75%
100%
125%
150%
2/
28/
02
4/
30/
02
6/
30/
02
8/
30/
02
10/
30/
02
12/
30/
02
3/
1/
03
5/
1/
03
7/
1/
03
8/
31/
03
10/
31/
03
12/
31/
03
3/
1/
04
5/
1/
04
7/
1/
04
8/
31/
04
10/
31/
04
12/
31/
04
3/
2/
05
5/
2/
05
7/
2/
05
9/
1/
05
11/
1/
05
Key Transaction Terms
Structure:
Modified merger of equals
1 share of FPL Group converted to 1 share of Constellation Energy after the merger
1 share of Constellation Energy converted to 1.444 shares of Constellation Energy after
the merger
Consideration:
100% stock
Premium:
Approximately 15% to Constellation Energy shareholders (1)
Ownership: (2)
Approximately 60% FPL Group shareholders
Approximately 40% Constellation Energy shareholders
Name:
Constellation Energy
Management:
Lew Hay to become chief executive officer
Mayo Shattuck to become chairman of the board
Board Members:
9 nominated by FPL Group, 6 nominated by Constellation Energy
Headquarters:
Dual corporate headquarters
Competitive energy in Baltimore, MD
Florida Power & Light in Juno Beach, FL
Baltimore Gas and Electric in Baltimore, MD
Fossil and renewable generation in Juno Beach, FL
(1) 20-day average CEG share price of $53.44 and FPL share price of $42.39 ending 12/13/05
(2) Estimated based on shares outstanding at 12/16/05
The New Senior Leadership Team
Mr. Lew Hay
CEO
Mr. Mayo Shattuck
Chairman
Currently FPL Group
Chairman and CEO
Currently Constellation Energy
Chairman and CEO
Organizational Structure
Board of Directors
Mayo Shattuck – Chairman
Lew Hay – Director
Non-executive (13) – Directors
Chief Executive Officer
Lew Hay
Competitive Energy
(Market-Facing
Retail & Wholesale)
Mayo Shattuck
Regulated Utilities
& Generation
Jim Robo
Chief Financial
Officer& Chief
Admin. Officer
Follin Smith
Transition &
Integration
Moray Dewhurst
Florida Power &
Light
Armando Olivera
Baltimore Gas and
Electric
Ken DeFontes
Combination Of Top-Performing Utilities
1.2
4.3
Electric Customers (millions)
0.6
-
Gas Customers (millions)
$249
(Ranks #8 of 91)
$176
(Ranks #1 of 91)
Low-cost operations
(O&M $ per customer)
102
Top quartile
3.0%
FPL
103
Top quartile
Focus on Customer Satisfaction
(J.D. Power 2005 Residential Survey)
1.0% - 1.5%
Healthy Long-term Volume Growth
(Customer & Usage)
BGE
Benefits To FPL and BGE Utility Customers
Balance sheet strength
Modest direct cost savings through leveraging
utility expertise across a larger platform
Opportunities to improve reliability through best
practices sharing
Mutual support
Nuclear scale
Coal expertise to Florida
Florida -
Benefits
to
Customers
Maryland –
Benefits
to
Customers
Complementary Competitive Business Strengths
Constellation
FPL Group
Both
Highest Load
Serving Market Share
Generation Assets in
NEPOOL / ERCOT
Focus on Cost and
Operational Efficiency
Strong Wind
Position
Strong Nuclear
Capability
Leading Risk
Management
Expertise
Generation Margin Expansion Before Synergies
Constellation – Mid-Atlantic Fleet
FPL Energy – Merchant Generation
(1) A revenue sharing agreement with previous owners begins upon PPA expiration
(2) Expected to close in the first quarter of 2006
(3) Excludes planned uprate of 17% in 2006
1.2
1.0
0.8
0.8
0.5
0.8
1.0
1.3
2005
2006
2007
2008
Gross
Margin
($ billions)
1.0
0.9
0.7
0.7
0.6
0.7
0.8
0.9
1.0
1.1
2005
2006
2007
2008
Gross
Margin
($ billions)
Other gross margin expansion opportunities
Productivity initiatives to increase output
Future PPA expirations
August 2009
Nine Mile Point Unit 1 (620 MW)
November 2011
Nine Mile Point Unit 2 (941 MW) (1)
February 2014
Duane Arnold (419 MW) (2)
August 2014
Ginna (498 MW) (3)
Complementary Generation and Customer
Businesses
FPL Energy
Constellation Energy
ERCOT
NEPOOL
PJM
Combined
Peak
Load
Served (1)
Generation (2)
Generation (2)
Generation (2)
1,500
900
600
3,679
2,793
1,159
6,300
9,800
13,200
800
-
6,413
7,800
10,700
13,800
4,479
2,793
7,572
(MW)
(MW)
(MW)
(MW)
(MW)
(MW)
Constellation’s customer market shares combined with FPL Energy’s
deregulated assets create a balanced footprint
TOTAL
3,000
7,631
29,300
7,213
32,300
14,844
Peak
Load
Served (1)
Peak
Load
Served (1)
(1) Peak load served as of 9/30/05
(2) Generation megawatts as of 12/5/05
Summary
Compelling opportunity to create leading competitive
energy provider
Well-matched, complementary contributions from two
strong companies
Multiple channels of growth, balanced by strong base of
moderate risk cash flow and earnings
Multiple sources of synergy
Combined entity well positioned for the opportunities and
challenges of the decade ahead
What the Merger Means for Employees
Enhanced opportunity
Larger, more diversified company
Greater financial strength
Key objectives
Contribute to new company’s success
Build a new enterprise
Impact on jobs
Reductions to be achieved by normal attrition
wherever possible
Enterprise-wide growth potential to provide added
career opportunities
Next Steps
Expected timetable to complete merger: 9 to 12 months
We must stay focused, continue to do our jobs and serve
our customers
FPL Group and Constellation Energy remain separate,
stand-alone companies until merger closes
We must continue to execute on 2005 / 2006 business plans
Management will:
Provide frequent updates to employees as merger
process continues
Be direct and forthright, “tell it like it is”
QUESTIONS?