Constellation to Acquire Calpine in $26.6 Billion Deal

Deal News | Jan 10, 2025 | Bridgepoint

Constellation, a leading U.S. clean energy producer traded on Nasdaq as CEG, has announced a definitive agreement to acquire Calpine Corp. in a cash and stock transaction. The deal values Calpine at approximately $16.4 billion, but after accounting for net debt and future cash flow, the net purchase price is $26.6 billion, implying a 2026 EV/EBITDA multiple of 7.9x. This acquisition will create the largest clean energy provider in the United States, combining Constellation's zero-emissions nuclear energy expertise with Calpine's low-emission natural gas and geothermal assets. The transaction is expected to significantly enhance Constellation's market presence, providing services to 2.5 million customers across the U.S., and result in immediate and significant accretion to Constellation’s EPS and cash flow. The combined entity will have a generation capacity of 60 gigawatts from diverse energy sources. The acquisition is funded through Constellation stock and cash, with a forecasted closing within 12 months, subject to regulatory and other standard approvals. Advisors to Constellation include Lazard and J.P. Morgan Securities LLC, with legal council provided by Kirkland & Ellis.

Sectors

  • Energy
  • Private Equity
  • Corporate Finance

Geography

  • United States – Primary geography of business operations and market impact as both Constellation and Calpine are major U.S. energy providers.
  • Canada – Involvement of Canada Pension Plan Investments as a significant shareholder, engaging in cross-border financial interest in the deal.

Industry

  • Energy – The primary industry involved, focusing on electricity generation from nuclear, natural gas, and renewable sources, aligning with the clean energy provider focus.
  • Private Equity – Involvement of Energy Capital Partners (ECP), a private equity firm that holds ownership in Calpine, reflecting interests in ownership transitions.
  • Corporate Finance – Significant role in structuring the acquisition deal valued at $26.6 billion, with advisors involved in financial management and strategic planning.

Financials

  • $26.6 billion – Net purchase price of the acquisition after accounting for generated cash and tax attributes.
  • 7.9x – Acquisition multiple applied to 2026 EV/EBITDA.
  • $4.5 billion – Cash component of the transaction.
  • 50 million shares – Constellation stock component, part of the transaction value.
  • 12.7 billion – Net debt of Calpine assumed in the transaction.

Participants

NameRoleTypeDescription
ConstellationAcquirerCompanyLeading clean energy provider in the U.S., acquiring Calpine to enhance its energy offering and market positioning.
Calpine Corp.Target CompanyCompanyMajor U.S. energy producer known for low-emission natural gas and geothermal energy, being acquired by Constellation.
Energy Capital Partners (ECP)Selling CompanyCompanyLeading private equity firm focused on the energy infrastructure sector, major shareholder of Calpine.
LazardFinancial AdvisorCompanyProvides financial advisory services to Constellation in this acquisition deal.
J.P. Morgan Securities LLCFinancial AdvisorCompanyAdditional financial advisory role supporting Constellation on the transaction.
Kirkland & EllisLegal AdvisorCompanyProvides legal counsel to Constellation during the acquisition.