Constellation to Acquire Calpine for $26.6 Billion
Deal News | Jan 10, 2025 | Bridgepoint
Constellation, a leading U.S. clean energy provider, has announced a significant merger with Calpine Corp. valued at $26.6 billion. The deal involves Constellation acquiring Calpine in a combination of stock and cash that includes the assumption of $12.7 billion in debt. This strategic agreement is set to establish the largest coast-to-coast clean energy provider with a portfolio encompassing nuclear, natural gas, geothermal, and other renewable sources. The acquisition aims to enhance Constellation's position in the competitive retail electricity market, offering diverse energy solutions to 2.5 million customers. By integrating Calpine's low-emission natural gas plants, the merger will fortify grid reliability and broaden Constellation's capacity for clean energy projects. Key stakeholders, including Calpine's owner Energy Capital Partners and others, have expressed confidence in the combined entity by agreeing to a stock lock-up period. Advisors for both companies include high-profile financial and legal firms, and regulatory approvals are anticipated within a year.
Sectors
- Energy
- Utilities
- Private Equity
Geography
- United States – The transaction and operations primarily occur within the United States, with a focus on expanding the combined company's footprint across the country.
- Canada – Regulatory approval from the Canadian Competition Bureau is required, indicating a cross-border component in the transaction.
Industry
- Energy – The merger between Constellation and Calpine is centered around the energy sector, focusing on clean energy production, nuclear power, natural gas, and renewable resources like geothermal energy.
- Utilities – Both Constellation and Calpine operate within the utilities sector, providing electricity services and solutions to millions of customers nationwide.
- Private Equity – Energy Capital Partners, a private equity firm, plays a significant role as a shareholder in Calpine, influencing the merger.
Financials
- 26.6 billion – The net purchase price for the merger between Constellation and Calpine, including debt and equity considerations.
- 16.4 billion – The equity purchase price of the transaction, composed of cash and stock.
- 12.7 billion – The amount of Calpine's net debt assumed by Constellation in the transaction.
- 237.98 – Trailing 20-day VWAP of Constellation stock used in the transaction.
- 2 billion – Projected free cash flow generation by the combined entity post-merger.
- 20% – Expected EPS accretion for Constellation in 2026 due to the merger.
- 2 per share – Expected EPS accretion in future years following the transaction.
- 60 gigawatts – The combined generation capacity from zero- and low-emission sources.
Participants
| Name | Role | Type | Description |
|---|---|---|---|
| Constellation | Acquiring Company | Company | A leading U.S. energy provider specializing in emissions-free electricity generation. |
| Calpine Corp. | Target Company | Company | A major U.S. producer of energy from low-emission natural gas and geothermal sources. |
| Energy Capital Partners | Selling Company | Company | A private equity firm and major shareholder in Calpine, involved in the sale to Constellation. |
| Lazard | Advisor | Company | Serving as financial advisor to Constellation. |
| J.P. Morgan Securities LLC | Advisor | Company | Serving as financial advisor to Constellation. |
| Kirkland & Ellis | Advisor | Company | Serving as legal counsel to Constellation. |
| Evercore | Advisor | Company | Lead financial advisor to Calpine. |
| Morgan Stanley & Co. LLC | Advisor | Company | Serving as additional financial advisor to Calpine and ECP. |
| Goldman Sachs & Co. LLC | Advisor | Company | Serving as additional financial advisor to Calpine and ECP. |
| Barclays US | Advisor | Company | Serving as additional financial advisor to Calpine and ECP. |
| Latham & Watkins | Advisor | Company | Serving as legal counsel to Calpine. |
| White & Case | Advisor | Company | Serving as legal counsel to Calpine. |
| Canada Pension Plan Investments (CPP Investments) | Shareholder | Company | A shareholder involved in the transaction, agreeing to an 18-month lock-up period. |
| Access Industries | Shareholder | Company | A shareholder involved in the transaction, agreeing to an 18-month lock-up period. |