EdF responds to Constellation takeover

22 September 2008

Nine Mile Point (Constellation)

Calvert Cliffs: Its 1735 MWe are among over 9000 MWe in Constellation generation assets available at knock-down price. Plans to add a new 1600 MWe reactor here are supported by thec ompany's new owners (Image: Constellation)

 

Electricité de France (EdF) has submitted a bid for Constellation Energy, rivaling a surprise takeover move made by MidAmerican Energy last week. Constellation managers, however, remain committed to their previous deal.

 

EDF International, a subsidiary of EdF, already owned 9.5% of Constellation in line with earlier agreements between the companies. Now it has said it "believes the MidAmerican transaction does not generate value creation expected by shareholders."

 

The new bid was submitted with Kohlberg Kravis Roberts and TPG Capital and included $1 billion of immediate investment - seen as essential to stabilise Constellation's energy trading division, which was unsettled by the global financial failure. This figure matched an immediate investment from MidAmerican, but equated to slightly different stock packages. An EdF statement did not make clear the value of its rival bid but Bloomberg put it at $6.2 billion - well beyond MidAmerican's $4.7 billion.

 

EdF said in a release that the Constellation board had not yet responded to the offer. Constellation executives said in a conference call they had chosen the best option from a range available to them, including issuing equity in public markets. MidAmerican's billion dollars were wired yesterday, making the firm Constellation's largest shareholder with a stake of 19.9%.

 

Constellation and MidAmerican remain committed to their deal, which they said would be completed within one year.

 

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