Paris, France - Shares of Constellation Energy Group Inc. (NYSE: CEG) jumped by more than 20 percent on reports that it has received a rival bid from French state-controlled electricity giant Electricite de France SA on Wednesday (Dec. 3), which challenges Warren Buffett's previous merger bid.
Early this year, Constellation forged an agreement with Buffett’s Des Moines, IA-based MidAmerican Energy Holdings Co. to merge at a price of $4.7 billion or $26.50 per share.
On Wednesday, Electricite de France offered $4.5 billion (3.53 billion euros) for 50 percent of the nuclear business of Baltimore, MD-based Constellation.
EDF’s nuclear production capacity, the largest in the world, consists of 58 power plants on 19 sites. The company now is trying to capture more energy market in the U.S.
The company's proposal also includes an up-front $1 billion
in cash investment in Constellation and an option pursuant to which Constellation could sell non-nuclear generation assets to EDF having an aggregate value of up to $2 billion.
The world’s biggest operator of atomic reactors also expects to receive the necessary regulatory approvals for the acquisition of its interest in the nuclear generation and operation business and close the transaction within six to nine months.
The closing for the deal would depend upon Constellation’s termination of its proposed transaction with MidAmerican and execution of a definitive agreement with the French power company.
“As Constellation’s largest stockholder, EDF has long admired and been a committed partner to the Company,” Chairman and Chief Executive Officer of EDF Pierre Gadonneix said. “Constellation is fundamentally strong and EDF, like many others, believes that the proposed MidAmerican transaction significantly undervalues Constellation and its future opportunities”
He continued: “We are confident that the terms of our proposal are demonstrably superior to those of the MidAmerican transaction.
In addition to providing Constellation stockholders with an opportunity to realize the value of their investment in the Company, our proposal provides more than sufficient liquidity to allow Constellation to remain a strong, standalone public company."
EDF said that its proposal is not subject to a financing condition and that approval from Constellation’s stockholders is not required.
Meanwhile, Constellation Energy said its Board of Directors will review the multi-faceted proposal.
However, it has not withdrawn, modified or qualified its recommendation that shareholders of Constellation Energy vote in favor of the merger with MidAmerican.
The special meeting of shareholders to vote on the merger with MidAmerican remains scheduled for 8:00 a.m. on December 23, 2008, the U.S. group said.
