US-based nuclear power provider Constellation Energy has agreed to acquire electricity generator Calpine in a cash and stock transaction valued at around $16.4bn
The consideration includes 50 million shares of Constellation stock and $4.5bn in cash plus the assumption of around $12.7bn of Calpine net debt.
The net purchase price is estimated at $26.6bn, after accounting for cash to be generated by Calpine between signing and the expected closing date, and tax attributes at Calpine.
Constellation intends to fund the cash consideration through cash on hand and cash flow generated by Calpine, between the agreement and closing of the transaction.
Calpine’s shareholders have agreed to an 18-month lock-up for their equity ownership of Constellation common stock, subject to an agreed schedule for potential sales.
The shareholders include ECP, Canada Pension Plan Investments and Access Industries.
The proposed acquisition is expected to be completed within 12 months, subject to the satisfaction of certain customary closing conditions.
The conditions include the expiration of the waiting period under the Hart-Scott-Rodino Act and approvals from certain US and Canadian regulators.
Upon closing, Constellation will continue its operations from its headquarters in Baltimore and maintain a significant presence in Houston.
Constellation president and CEO Joe Dominguez said: “By combining Constellation’s unmatched expertise in zero-emission nuclear energy with Calpine’s industry-leading, best-in-class, low-carbon natural gas and geothermal generation fleets, we will be able to offer the broadest array of energy products and services available in the industry.
“Both companies have been at the forefront of America’s transition to cleaner, more reliable and secure energy, and those shared values will guide us as we pursue investments in new and existing clean technologies to meet rising demand.
“What makes this combination even more special is it brings together two world-class teams, with the most talented women and men in the industry, who share a noble passion for safety, sustainability, operational excellence and helping America’s families, businesses and communities thrive and grow.”
The acquisition will expand Constellation’s clean generation portfolio in the US, with a diverse, coast-to-coast portfolio of zero- and low-emission generation assets.
Together, Constellation and Calpine will have nearly 60GW of capacity from nuclear, natural gas, geothermal, hydro, wind, solar, cogeneration and battery storage.
The combined company’s footprint will span the continental US and include a significantly expanded presence in Texas, California, Delaware, New York, Pennsylvania, and Virginia.
It will be positioned as a top retail electricity supplier in the US, providing a wide range of energy solutions to 2.5 million homes and businesses across the country.
In addition, the acquisition will strengthen Constellation’s position as the largest clean energy producer with the lowest carbon emissions intensity in the US.
Lazard and J.P. Morgan Securities served as financial advisors, and Kirkland & Ellis as legal counsel to Constellation on the transaction.
Evercore served as lead financial advisor, Morgan Stanley & Co., Goldman Sachs & Co., and Barclays US as additional financial advisors to Calpine.
Also, ECP, and Latham & Watkins and White & Case served as legal counsel to Calpine.
Calpine president and CEO Andrew Novotny said: “This is an incredible opportunity to bring together top-tier generation fleets, leading retail customer businesses and the best people in our industry to help drive a stronger American economy for a cleaner, healthier and more sustainable future.
“Together, we will be better positioned to bring accelerated investment in everything from zero-emission nuclear to battery storage that will power our economy in a way that puts people and our environment first. It’s a win for every American family and business in our newly combined footprint that wants clean and reliable energy.
“ECP’s commitment to these goals over the last seven years was critical to the progress we have made as a company and to laying a foundation for future growth.”
