Constellation Energy To Acquire Calpine In $16.4 Bln Cash And Stock Deal

(RTTNews) - Constellation Energy Group, Ins. (CEG) and Calpine Corp. (CPN) announced Friday they have entered into a definitive agreement under which Constellation will acquire Calpine in a cash and stock transaction valued at an equity purchase price of approximately $16.4 billion.

The total consideration is composed of 50 million shares of Constellation stock and $4.5 billion in cash plus the assumption of approximately $12.7 billion of Calpine net debt.

After accounting for cash that is expected to be generated by Calpine between signing and the expected closing date, as well as the value of tax attributes at Calpine, the net purchase price is $26.6 billion.

The proposed deal creates the nation's largest clean energy provider, opening opportunities to serve more customers coast-to-coast with a broader array of energy and sustainability products. The combination also forms the nation's leading competitive retail electric supplier, providing 2.5 million customers with a broader array of customized energy and sustainability solutions.

The transaction will deliver benefits to Constellation's owners, with expected immediate adjusted operating EPS accretion of more than 20% in 2026 and at least $2 per share of EPS accretion in future years.

The transaction is projected to add more than $2 billion of free cash flow annually, creating strategic capital and scale to reinvest in the business. Constellation's base earnings outlook is expected to continue growing at a double-digit rate through the decade.

Constellation expects to fund the cash portion of the transaction through a combination of cash on hand and cash flow generated by Calpine in the period between signing and closing of the transaction.

Calpine's significant shareholders, including ECP, Canada Pension Plan Investments and Access Industries, have agreed to an 18-month lock-up with respect to their equity ownership of Constellation common stock, subject to an agreed upon schedule for potential sales.

The transaction is expected to close within 12 months of signing, subject to the satisfaction of customary closing conditions, including the expiration or termination of the waiting period pursuant to the Hart-Scott-Rodino Act, and regulatory approvals from the Federal Energy Regulatory Commission, the Canadian Competition Bureau, the New York Public Service Commission, the Public Utility Commission of Texas and other regulatory agencies.

Following the close of the transaction, Constellation will continue to be headquartered in Baltimore and will continue to maintain a significant presence in Houston, where Calpine is currently headquartered.