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By Samuel R. Avro on Dec 17, 2008 with no responses

Constellation Accepts French Bid, Rejects Buffett


The Fench state owned nuclear giant succeeded in a bid to purchase Constellation Energy's nuclear assets.

Constellation Energy, The U.S.’s largest wholesale power seller, has officially entered into an agreement to sell half of its company to the French power giant Electricite de France (EDF). At the same time, the company terminated the original buyout agreement that it had with Mid-American Energy, a subsidiary of Warren Buffett’s Berkshire Hathaway.

The $4.5 billion deal, expected to be completed within six to nine months, includes an immediate $1 billion cash investment in Constellation Energy and an option to sell to EDF Development Inc. up to $2 billion of non-nuclear generation assets.

“This agreement with EDF Development Inc. provides an opportunity for Constellation Energy shareholders to achieve greater value for the company’s significant asset base,” said Mayo A. Shattuck III, chairman, president and chief executive officer of Constellation Energy. “The investment also provides the liquidity support to stabilize and grow our business as an independent public company dedicated to serving our customers across the country.”

EDF, the largest owner of nuclear plants in the world, has recently made strong moves towards the acquisition of more nuclear plants worldwide. They recently extended their offer to buy eight plants in the U.K. from British Energy, and have now thwarted Mid-American’s bid in the latest buyout.

Mid-American had originally agreed to buy Constellation for $4.7 billion.

“We greatly appreciate the professionalism, good faith and cooperation MidAmerican’s management and board have shown since we first initiated discussions in September,” said Mayo A. Shattuck III, chairman, president and chief executive officer of Constellation Energy. “Based on a careful process to examine all alternatives available to our shareholders and other stakeholders, we believe that termination of the merger agreement is in the best interest of all parties.”

Constellation received an emergency investment of $1 billion cash from Mid-American, which may have saved the company from declaring bankruptcy.