Less than a month after plans for a $4.7 billion rescue merger were announced Sept. 18, MidAmerican Energy Holdings Co. and Constellation Energy Tuesday filed an application with the Federal Energy Regulatory Commission requesting approval of their merger plan. The companies asked FERC to act on the application by Jan. 15.

MidAmerican President Gregory E. Abel said, “We believe this transaction will provide Constellation Energy with improved access to capital through the backing of MidAmerican, ensuring it will continue to operate its facilities safely and reliably under the guidance of a United States-based owner.” On Oct. 5 MidAmerican said its 14-day due diligence was completed early, and it had waived the related termination right under the merger agreement.

Berkshire Hathaway’s MidAmerican stepped in quickly after Constellation’s stock price plunged precipitously following the bankruptcy of Lehman Brothers Holdings, with which Constellation had various business relationships. Investor fears had centered on the possibility that the parent of distribution utility Baltimore Gas & Electric and the nation’s largest wholesale power seller could lose its credit lines (see Daily GPI, Sept. 17).

Under the 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/share in cash. The 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 in early October. The merger proceeded despite a subsequent higher bid, $6.2 billion ($35/share), for Constellation from Electricite de France International SA, the largest power producer in Europe, and stockholder suits claiming that the MidAmerican bid did not reflect Constellation’s true value.

©Copyright 2008Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.