Constellation has announced its acquisition of natural gas and geothermal power provider Calpine for a staggering $16.4 billion, marking a significant consolidation in the power industry. This move will bring together two major power companies, creating the nation's leading retail electric supplier with a customer base of 2.5 million.
The acquisition will not only expand Constellation's geographic footprint across the continental U.S. but also strengthen its presence in key strategic states such as Texas, California, Delaware, New York, Pennsylvania, and Virginia. With Texas being the fastest-growing market for power demand, this acquisition positions the combined entity for substantial growth.
Constellation will fund the acquisition by offering 50 million of its shares and $4.5 billion in cash, in addition to assuming approximately $12.7 billion in Calpine debt. The total value of the deal is estimated to be around $26.6 billion.
Upon completion of the acquisition, the merged company will boast nearly 60 gigawatts of capacity from various zero- and low-emission sources, including nuclear, natural gas, geothermal, hydro, wind, solar, cogeneration, and battery storage. This diverse energy portfolio will enable the company to offer a wide range of energy products and services to its customers.
Constellation's CEO, Joe Dominguez, expressed enthusiasm about the merger, highlighting the combined expertise in zero-emission nuclear energy and low-carbon natural gas and geothermal generation fleets. The deal is expected to generate over $2 billion in free cash flow annually, providing the company with the resources to reinvest in its operations.
Calpine's CEO, Andrew Novotny, emphasized the strategic benefits of the transaction, stating that the combined entity will accelerate investments in sustainable energy solutions like zero-emission nuclear and battery storage, prioritizing both people and the environment.
The acquisition is subject to regulatory approvals from various agencies, including the Federal Energy Regulatory Commission, the Canadian Competition Bureau, and state-level commissions in New York and Texas. The transaction is anticipated to close within a year of its signing, paving the way for a new era in the power industry.
Calpine, headquartered in Houston, will soon become part of Constellation Energy Corp., based in Baltimore. Following the announcement, Constellation's shares surged by more than 25% on Friday, reflecting investor confidence in the strategic move.
