Energy
EdF Bids for Constellation Nuclear Assets
The Associated Press
12/03/08 - 06:18 AM EST
Updated from 3:49 a.m. EST
PARIS -- Electricite de France said Wednesday it will challenge famed investor Warren Buffett's planned takeover of U.S. wholesale power generator Constellation Energy (CEG Quote) by offering $4.5 billion for half the company.
France's state-controlled power company, which backed down from a full takeover bid for Constellation in October, said it had offered to take a 50% stake in Constellation's nuclear operations through a joint venture.
Shares in EdF sank following the announcement amid investor fears that a bruising takeover battle may be brewing.
EdF, which owns 9.5% of Constellation, said the offer amounts to around $52 a share and that the price represents a 96% premium to a rival takeover proposal for Constellation by Buffett's MidAmerican Energy Holdings, which is offering $26.50 a share.
EdF's offer includes a $1 billion "upfront" cash infusion in Constellation, and an option to sell up to $2 billion of "non-nuclear generation assets" to the French company in a deal that could close in six to nine months.
Constellation's nuclear business includes three nuclear power stations with five reactors located in Maryland and New York. Nuclear power accounts for 61% of Constellation's total electricity generating capacity of 8,700 megawatts.
Constellation's non-nuclear assets include coal- and natural gas-fired electric plants, as well as oil and renewable energies such as solar, geothermal and hydro power.
On Tuesday, Baltimore-based Constellation said it likely would have filed for bankruptcy protection without an immediate $1 billion infusion from MidAmerican, a unit of Buffett's Berkshire Hathaway (BRK.A Quote).
Constellation also warned in a U.S. regulatory filing that unstable market conditions make the deal with MidAmerican critical. MidAmerican announced in September that it offered to buy Constellation for $26.50 a share -- plus the $1 billion cash injection.