French Power Company Makes Higher Bid for Constellation

By Mark Williams
Associated Press
Tuesday, September 23, 2008

A French nuclear power company is upping the ante for Constellation Energy Group, offering to pay $35 per share for the Baltimore wholesale power supplier, which last week agreed to be sold to a subsidiary of Warren E. Buffett's Berkshire Hathaway.

The offer, made by Electricite de France on Friday and disclosed yesterday, is $8.50 per share higher than the $26.50-per-share offer that Constellation accepted from MidAmerican Energy Holdings.

EDF, which already owns 9.5 percent of Constellation, said it was making the offer in conjunction with private-equity firms Kohlberg Kravis Roberts and TPG Capital.

EDF called the offer from MidAmerican Energy inadequate, but Mayo A. Shattuck III, Constellation's chairman and chief executive, told analysts yesterday the company has accepted what it considers the best offer.

Shattuck said on a conference call that Constellation favored the deal with MidAmerican because it provided an immediate cash injection and a higher degree of certainty on issues such as regulatory approval.

Constellation's shares rose $1.44, or 5.6 percent, to $27.20 in heavy trading, well off the utility's 52-week high of $107.97 on Jan. 8.

MidAmerican announced Thursday that it would buy Constellation Energy for $4.7 billion and give it an immediate $1 billion infusion. The deal came after Constellation's shares plummeted amid rising concerns about the company's liquidity.

EDF, a major operator of nuclear power plants, is owned mostly by the French government and is the leading power producer in Europe. It has a joint venture with Constellation to build four next-generation nuclear reactors.

In addition to offering $35 per share for Constellation, EDF said it would immediately invest $1 billion in the company.

Any such deal would come with headaches, however. Nuclear Regulatory Commission rules would prohibit outright ownership of Constellation's five reactors by a foreign company. Constellation has two reactors in Maryland and three in upstate New York.

MidAmerican produces energy from sources including natural gas, hydroelectric, nuclear, coal, geothermal and wind. The company, with more than $12 billion in annual revenue, has about 6.7 million customers in the United States and Great Britain.

Constellation supplies electricity to commercial and industrial customers. It also manages fuels and energy services on behalf of energy intensive industries and owns 83 generating units in the United States.

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