S&P 500 nuclear component Constellation Energy announced early Friday it has agreed to acquire Calpine, a natural gas and geothermal power generator, in a deal valued at $26.6 billion. CEG shares leaped Friday, perhaps signaling a buying opportunity.
Constellation Energy reported Friday that the deal for Calpine is a cash and stock transaction valued at an equity purchase price of approximately $16.4 billion, composed of 50 million shares of Constellation stock and $4.5 billion in cash. It will also assume $12.7 billion of Calpine debt.
The company added that after accounting for expected Calpine cash generation between signing and the expected closing date, as well as the value of tax attributes at Calpine, the net purchase price is $26.6 billion. The transaction should close within 12 months of signing.
Bloomberg reported on Wednesday that Constellation Energy was in discussions with Calpine's private-equity owners about a deal that could value the company at about $30 billion including debt. Calpine was taken private in 2017.
"By combining Constellation's unmatched expertise in zero-emission nuclear energy with Calpine's industry-leading, best-in-class, low-carbon natural gas and geothermal generation fleets, we will be able to offer the broadest array of energy products and services available in the industry," Chief Executive Joe Dominguez said in the press release Friday.
Calpine is one of the largest U.S. generators of electricity from natural gas and geothermal resources, with a fleet of 84 power plants in operation or under construction representing more than 27,000 megawatts of generation capacity, according to the private company.
"At the rumored $30 billion acquisition price, we were originally skeptical of the deal, as the Calpine portfolio's commodity risk and cash flow volatility seemed misaligned with CEG's stable, nuclear-heavy profile, potentially leading to higher risk premiums for CEG's stock," Enverus Intelligence Research analyst Scott Wilmot said in a statement Friday.
"CEG becoming more like Vistra is probably not what investors were looking for. However, at the confirmed $26.6 billion price, the transaction appears far more compelling, balancing risk and value to justify the strategic shift," Wilmot added.
Constellation Stock
CEG stock soared 25.2% to 305.19 during market trade on Friday, marking a breakout from a traditional 288.75 buy point. Shares tumbled 4.6% on Wednesday on reports of the deal, but closed above their 50-day line after diving to 228.05 intraday.
Investors could have used Monday's high of 267.82 as an early entry.
Constellation stock had moved higher to start 2025 after a 90%-plus gain in 2024, as the nuclear energy provider rode the artificial intelligence wave and the expected electricity demand surge from the data centers used to train AI models.
On Monday, CEG jumped 4.7% after climbing 4% Friday after the Treasury Department and Internal Revenue Service revised its rules for hydrogen production tax credits, allowing nuclear power providers to qualify.
The S&P 500 component also recently announced a 10-year, $840 million contract with the U.S. General Services Administration to supply power to facilities of more than 13 government agencies.
Nuclear Stocks Surged Last Year, But Are They A Buy Or A Sell In 2025?
Analysts view natural gas as a key part of answering the power demand increase. In 2024, natural gas plants across the country likely increased their generation vs. 2023, as gas generation hit record levels with a roughly 8% rise over the previous year, according to a recent FactSet Insights report. Meanwhile, applications for gas-fired power plants more than doubled in 2024 compared with the previous year, according to FactSet.
Nuclear Energy Stocks Enter 2025 On A High. AI Data Centers Need Them, A Lot.
Among other nuclear-related utility plays, Vistra gained 3.7% to 166.73. The stock is working on a possible handle to a cup base.
Talen Energy climbed 2.9% after rebounding from a 50-day-line test to rise 1.4% on Wednesday. TLN stock is working on a short consolidation.
Constellation Energy stock has an 88 Composite Rating out of 99. Additionally, the S&P 500 nuclear stock has an 89 Relative Strength Rating and a 55 EPS Rating out of 99.
Please follow Kit Norton on X @KitNorton for more coverage.
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