Constellation Energy (CEG, Financial) is reportedly in advanced talks to acquire Calpine Corp., potentially marking one of the largest deals in the power generation sector. The acquisition, including debt, could value Calpine at approximately $30 billion. Discussions are ongoing with Calpine's private equity owners, Energy Capital Partners, CPP Investments, and Access Industries, who privatized Calpine in 2017 in a deal worth over $17 billion.
Over the past year, Constellation's stock has more than doubled. However, following news of the potential acquisition, its shares fell 11% before closing down 4.6% at $243.84, giving it a market value of about $77 billion.
Calpine, founded in the 1980s, operates nearly 80 plants across 22 U.S. states and Canada, using natural gas and geothermal resources to generate electricity for around 27 million households annually. As the demand for electricity surges in the U.S. due to increased data center operations, new factories, and the electrification of various sectors, Constellation sees this acquisition as a strategic opportunity to expand its power generation capabilities.
The proposed cash and stock deal would significantly boost Constellation's earnings per share and diversify its plants geographically and by fuel type. However, negotiations are ongoing, and the final terms, including the price, may change.
Constellation's interest in expansion has been evident since its separation from Exelon Corp. in 2022, with CEO Joe Dominguez expressing a focus on growth through mergers and acquisitions. In 2023, Constellation acquired a 44% stake in a Texas nuclear plant from NRG Energy Inc. for $1.75 billion.
