Constellation Energy Group is facing a wave of lawsuits from shareholders who are seeking to block the company’s $4.7 billion buyout by Berkshire Hathaway’s MidAmerican Energy Holdings Co. and who claim that Constellation Energy inflated its financial results and intentionally mislead investors.
At least five shareholder lawsuits have been filed in Baltimore City Circuit Court, claiming that Des Moines, IA-based MidAmerican Energy’s offer did not reflect the true value of Constellation Energy, parent of Baltimore Gas & Electric and the nation’s largest wholesale power seller and major natural gas supplier, according to Associated Press..
One of the lawsuits said that while the offer by MidAmerican Energy represented a 7% premium over Constellation Energy stock’s closing price on the day before the transaction was announced last Thursday, the price was a 60% discount to where the stock was trading two days prior to the deal, the wire service reported.
Electricite de France (EDF) International SA, the largest power producer in Europe, has made a rival offer to acquire Baltimore-based Constellation Energy for $35/share, $8.50/share more than what MidAmerican Energy bid. Despite the higher bid, Constellation has accepted MidAmerican Energy’s offer of $26.50/share, or $4.7 billion (see Daily GPI, Sept. 23; Sept. 19). On Monday EDF said Constellation Energy’s board of directors had not even responded to its offer.
In related action, a class-action lawsuit has been brought in New York on behalf of buyers of Constellation Energy stock. The plaintiffs allege that the company’s financial results were inflated by overly optimistic assumptions, and its exposure to credit problems of trading partners (Lehman Brothers) was much greater than represented.
The lawsuit, which was filed in the U.S. District Court for the Southern District of New York, seeks to recover damages on behalf of all purchasers of Constellation Energy publicly traded securities between Jan. 30 and Sept. 16 of this year.
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