One of Constellation Energy Group's largest shareholders formally protested the company's $4.7 billion sale to Warren E. Buffett's MidAmerican Energy yesterday, saying it had offered a substantially higher bid of $6.2 billion last week but got no response from the Baltimore firm's board of directors.
Word that Electricite de France might counteroffer Buffett's $26.50-per-share offer had circulated for several days, but yesterday the company surprised shareholders by announcing it had already offered to buy the company for $35 a share. In a letter filed with the Securities and Exchange Commission, EDF also said the deal with Buffett's MidAmerican Energy Holdings Co. "does not provide adequate value to shareholders."
The disclosure forced executives at Baltimore Gas and Electric's parent to scramble to defend their decision. Constellation Chief Executive Mayo A. Shattuck III said the MidAmerican deal, struck in principle last Wednesday, was reached out of necessity as the company faced a credit crisis threatening to force it into bankruptcy.
"The events of last week put us in a position where we had to look for the most superior offer," Shattuck said.
But Constellation's shareholders, who must approve the deal, seemed skeptical. The company's shares on the New York Stock Exchange surged after EDF's bid was announced, closing up more than 5 percent at $27.17. It was the first time since the deal was announced last week that the shares had closed above MidAmerican's offering price.
Officials at EDF declined to say whether they would fight the MidAmerican deal, but said the company was "reviewing all of its options with respect to increasing the value of its investment in Constellation for itself and Constellation's other shareholders."
In a conference call with analysts, Shattuck was repeatedly asked to justify accepting Buffett's bid while EDF's offer was on the table. The final agreement with MidAmerican was announced Friday night, but EDF said it began discussions with Constellation officials Wednesday and submitted a formal proposal Friday afternoon. The French offer also included an immediate $1 billion infusion of cash, similar to the payment Constellation received yesterday from MidAmerican.
Shattuck declined to address the EDF offer specifically, but said Buffett's stabilizing effect on a skittish market and the likelihood of easier regulatory approval made the MidAmerican offer "the best overall solution for all our stakeholders.
