Amidst lawsuits, a competing bid and some angry shareholders, the Constellation Energy Group and MidAmerican Energy Holdings merger continues to move forward, according to the companies. MidAmerican said Friday it has completed its 14-day due diligence of Constellation’s retail and wholesale businesses, including trading records.
“Our 14-day due diligence was completed early, and we waived the related termination right under the merger agreement,” said MidAmerican CEO Gregory E. Abel.
Berkshire Hathaway’s MidAmerican came to the rescue after Constellation’s relationship with bankrupt Lehman Brothers Holdings Inc. and fears that it could lose its credit lines sparked a freefall in the electricity supplier’s stock price in mid-September (see Daily GPI, Sept. 18). Under the Sept. 19 merger agreement (see Daily GPI, Sept. 19), MidAmerican will purchase all of the outstanding shares of Constellation for about $4.7 billion, or $26.50 per share, cash. The definitive agreement has been approved by both companies’ boards and is subject to shareholder and federal and state regulatory approvals. The transaction is expected to close in nine to 12 months.
“With MidAmerican’s affirmation of the stability and underlying strength of Constellation Energy and the recent infusion of $1 billion to increase our liquidity, we are now poised to successfully complete the merger approval process,” said Constellation CEO Mayo A. Shattuck III.
The deal has encountered a few bumps along the way. A number of shareholder lawsuits have been filed claiming that Des Moines, IA-based MidAmerican’s offer did not reflect the true value of Constellation (see Daily GPI, Sept. 26), parent of Baltimore Gas & Electric and the nation’s largest wholesale power seller and major natural gas supplier.
Another hiccup is the $6.2 billion ($35/share) rival offer for Constellation from Electricite de France (EDF) International SA, the largest power producer in Europe. Despite the higher bid, Constellation has accepted MidAmerican Energy’s offer (see Daily GPI, Sept. 23).
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