Constellation cancels deal with Buffett unit, OKs French deal

ByABC News
December 17, 2008, 11:49 PM

COLUMBUS, Ohio -- Constellation Energy Group of Baltimore had agreed to the $26.50-a-share bid by Buffett's MidAmerican Energy Holdings of Des Moines, back in September. The deal, which included a much-needed $1 billion capital infusion, came after Constellation's shares plummeted amid liquidity concerns that had analysts worried the nation's largest wholesale power generator would go out of business.

But Electricite de France, already Constellation Energy's largest shareholder with a 9.5% stake, had complained that MidAmerican's offer shortchanged the company. EDF then offered to buy all of Constellation for $35 a share but backed off that proposal in October. Earlier this month it made its own $4.5 billion bid for Constellation's reactors in Maryland and New York. The transaction could lead to the only foreign ownership stake in U.S. nuclear plants.

"This agreement with EDF Development Inc. provides an opportunity for Constellation Energy shareholders to achieve greater value for the company's significant asset base," said Mayo Shattuck III, chairman, president and chief executive of Constellation Energy.

EDF's offer for half of Constellation's nuclear business includes an immediate $1 billion cash infusion and an option for Constellation to sell up to $2 billion of non-nuclear generation assets to the French company in a transaction expected to close in six to nine months. Unlike the deal with MidAmerican, the offer from EDF allows Constellation to remain an independent company.

Constellation's nuclear business includes three nuclear power stations with five reactors in Maryland and New York. Nuclear power accounts for 61% of Constellation's total electricity generating capacity of 8,700 megawatts. The companies already have a joint venture to plan new nuclear projects in the U.S.