France's EDF did say in October that it was no longer interested in trying to buy Constellation Energy. Actually, it said that given the state of financial markets then, the time was not right. It seems one had to take the French company literally, because ... it's back.
The markets don't seem to have changed a great deal, but clearly something did. The new offer from EDF stirs the pot in Maryland, where MidAmerican Energy's $26.50/share offer has generated lots of mixed feelings.
Jay Hancock at the Baltimore Sun noted today that Constellation's share price was up a few dollars this morning, to $28-plus, meaning that at first blush the market likes EDF's idea, which would further the EDF-Constellation nuclear venture while leaving Baltimore Gas & Electric pretty unaffected. The offer is complex, and all its implications weren't immediately clear
Now, Warren Buffett's MidAmerican has offered Maryland all kinds of concessions with respect to the utility, basically saying it is willing to go along with just about any conditions the state might put on the deal. But share price is share price. EDF says it would buy half of Constellation's nuclear business for $4.5 billion and deal with other assets as well. EDF, which badly wants to keep building its global nuclear business, to which the US is key, said its offer was equivalent to around $52 per Constellation share, a premium of 96% above the MidAmerican proposal.
Constellation management has been pushing its holders hard to approve MidAmerican's bid. Today, it has simply said it will consider EDF's new overture as soon as possible. Shareholders are scheduled to vote on the MidAmerican deal December 23.
According to Hancock at the Sun, EDF is "offering everything shareholders, Constellation management and Baltimore city fathers/mothers might want." Whether MidAmerican comes back with something remains to be seen. Buffett is not known for fisticuffs. For power regulation geeks, it has been intriguing to think of a company that owned electric utility businesses on both coasts, but despite the good deal of negotiations and regulatory filings MidAmerican has done, maybe this one won't happen. MidAmerican's arrangement with Constellation provides for Buffett to get cash, notes and a stake in Constellation if the deal falls through.
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