Constellation Energy said Monday that subsidiary Constellation NewEnergy-Gas Division (CNE Gas) would acquire Cornerstone Energy Inc., further positioning CNE Gas as a supplier to commercial, industrial and institutional customers in North America and giving the company a foothold in growing ethanol markets.
The acquisition will increase the scale of CNE Gas by 29% in terms of volume (to 457 Bcf of deliveries per year) and expand its geographic footprint and its leadership in new and existing markets, Constellation said.
CNE Gas is Constellation’s retail gas marketing arm. Constellation NewEnergy is its retail power marketing arm. Constellation Energy also has a division called Constellation Energy Commodities Group, which is a wholesale gas and power marketer. The Commodities Group ranked sixth on NGI‘s ranking of top North American gas marketers for the third quarter of 2006.
Headquartered in Omaha, NB, privately held Cornerstone Energy is one of the nation’s largest nonutility affiliated gas marketing companies. It provides supply and financial hedging services to more than 1,400 commercial, industrial and institutional customers across the Midcontinent. It also provides gas and related services to more than 8,500 small commercial businesses.
“Growing the scale of Constellation NewEnergy’s Gas Division will allow us to increase efficiency and broaden the set of products and services we supply to customers,” said Thomas F. Brady, executive vice president corporate strategy and retail competitive supply, Constellation Energy. “It also will provide us with an access point for the growing ethanol markets in the Corn Belt. From a strategic and market standpoint, it works on many levels.”
The transaction is expected to close in May, subject to conditions, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Act.
It is anticipated that Cornerstone Energy’s 42 employees, including its founders, will join CNE Gas. Upon closing, Cornerstone Energy will operate under the Constellation NewEnergy Gas Division brand from its base in Omaha and report into the CNE Gas headquarters in Louisville, KY.
Constellation Energy expects the transaction to be neutral to 2007 earnings and modestly accretive in 2008.
Constellation created CNE Gas in 2004 by consolidating three subsidiaries: Alliance Energy Services, Blackhawk Energy Services and Kaztex Energy Management (see Daily GPI, Feb. 27, 2004).
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