While things still appear aligned for Warren Buffett’s MidAmerican Energy Holdings to scoop up embattled Constellation Energy for $4.7 billion, or $26.50/share (see Daily GPI, Sept. 19), reports in a number of newspapers indicate that there could be a dark horse that might swoop in over the weekend with a competing offer, one that is rumored to be more than a billion dollars sweeter to Constellation.
One such report comes from Les Echos, the French financial daily newspaper, which claims Electricite de France SA (EDF) is eyeing an 11th hour offer for Constellation’s hand that will trump the current offer. The article said EDF, which currently has a 9.51% stake in Constellation, would take on a U.S. partner — as required by U.S. regulations — in placing its bid for the electricity giant.
EDF, which has a joint venture with Constellation already, had hopes of using the U.S. company as its jumping off point in the states. The French firm is also in final negotiations on a 15 billion euro offer for British Energy, which primarily operates nuclear power plants in the United Kingdom.
Les Echos reported that EDF contacts have already been made with various potential allies and that several American electricity companies should be tempted by the opportunity, especially since it is widely believed that MidAmerican is acquiring Constellation at a price that does not reflect the intrinsic value of the company. Citing several sources, the paper said EDF and a U.S. partner could likely pay between $1 billion and $2 billion more than the MidAmerican deal.
Another report in the Financial Times Friday said EDF could have its deal on the table as early as Friday night.
Late Friday afternoon, MidAmerican Energy reported that its tentative merger agreement with Constellation had gone definitive, which still does not rule out a competing offer. The definitive agreement, which has been approved by both companies’ boards of directors, is subject to shareholder and customary federal and state regulatory approvals. The companies expect the transaction to close within nine months. The agreement expires nine months after its execution but may be extended by either company for up to three months.
“Having reached a definitive agreement with Constellation Energy, we look forward to gaining the necessary approvals to bring together our companies to establish a world-class organization of people and an industry-leading collection of energy assets,” said MidAmerican Energy CEO Gregory E. Abel. “We believe Constellation Energy has a strong business plan and are committed to helping the company reach its long-term goals, while also maximizing the benefits of our complementary capabilities.”
“The significant industry expertise and financial stability of MidAmerican and Berkshire Hathaway will allow Constellation Energy to continue our strong heritage as a first-choice energy solution provider and continue to build our business for the next 200 years,” said Constellation Energy CEO Mayo A. Shattuck III.
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