Constellation Strikes Deal to Sell Its Nuclear Operations to EDF - WSJ.com
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DECEMBER 17, 2008, 12:20 P.M. ET
Constellation Strikes Deal to Sell Its Nuclear Operations to EDF By DAVID G AUTHIER -VILLARS
PARIS–France state-controlled Electricite de France said Wednesday that it had agreed to buy 49.99% of the nuclear power business of Constellation Energy Group Inc. for $4.5 billion, effectively thwarting financier Warren Buffett's plans to take over the Baltimore-based company. Constellation had agreed in September to be bought by Mr. Buffett's MidAmerican Energy Holdings Co. Now, the new deal – which requires regulatory clearance in the U.S. – marks a major victory for the French firm, allowing it to push ahead with a nuclear power expansion in the U.S. According to the agreement, EDF will make an immediate, $1 billion cash investment in Constellation. In a separate statement, MidAmerican, a unit of Mr. Buffett's Berkshire Hathaway Inc., said it has withdrawn its offer for Constellation. Though the turn of events is a defeat for Mr. Buffett, the U.S. financier will walk away with a hefty breakup fee and other compensation – a package valued at $593 million. EDF, the world's largest nuclear utility, has a lot at stake in Constellation. The French company already owns a 9.5% interest in Constellation – a $1 billion dollar investment on which EDF has suffered heavy losses because of the fall in Constellation's share price. In addition, EDF and Constellation have a joint venture aimed at building new nuclear plants in North America. Constellation agreed to sell itself to Mr. Buffett, after market turmoil hobbled its energy-trading business and forced the company to the brink of bankruptcy. Needing to move quickly, Constellation chose MidAmerican's offer of $26.50 a share, plus a cash infusion of $1 billion, over a $35-a-share deal from EDF, which had teamed up with private-equity firms Kohlberg Kravis Roberts & Co. and TPG to make its bid. On Wednesday, EDF said it was confident that it won't face significant regulatory hurdles and expects to be able to close the deal six to nine months after signing. Its proposal wouldn't require a new shareholder vote or approval from Maryland state regulators.
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17/12/2008
Constellation Strikes Deal to Sell Its Nuclear Operations to EDF - WSJ.com
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