French utility Electricite de France, rebuffed in its efforts to acquire Constellation Energy Group, is expected today to offer to buy 50 percent of Constellation's nuclear power business for nearly the same price that MidAmerican Energy Holdings Co. would pay for all of Constellation, sources familiar with the situation said late yesterday.
EDF is Constellation's largest shareholder and partner in new nuclear development. On Dec. 23, Constellation shareholders will vote on the $4.7 billion transaction with MidAmerican, which is controlled by billionaire Warren Buffett.
"It definitely clouds the picture and gives the shareholders something to contemplate," said Paul Justice, an analyst with Morningstar.
EDF is also proposing to provide Baltimore-based Constellation an immediate $1 billion cash infusion, an investment that would be credited against the $4.5 billion purchase price of the nuclear assets.
EDF's proposal would require review by the Nuclear Regulatory Commission and the Committee on Foreign Investment in the United States; it is less clear whether it would require approval by Constellation shareholders or review by the Maryland Public Service Commission, which is examining the MidAmerican transaction.
Constellation, one of only two Fortune 500 companies based in the Baltimore region, would remain a publicly traded company headquartered in Baltimore if the board accepts EDF's offer, according to the sources.
Constellation would be left with Baltimore Gas and Electric, the utility that serves 1.1 million electric and gas customers in Maryland; its coal- and natural-gas power generation business; its commodities trading operations and half the nuclear business.
Constellation's nuclear assets include the Calvert Cliffs units in Southern Maryland and the Nine Mile Point and R.E. Ginna plants in New York state.
EDF's offer for half the nuclear unit puts the total value of Constellation at $52 a share, nearly double MidAmerican's $26.50-per-share bid, the sources say.
MidAmerican's bid is for one-fourth of Constellation's market value at the beginning of the year.
Constellation sold itself to MidAmerican in mid-September to avoid bankruptcy as it faced a liquidity crisis in the commodities trading operations. As part of the deal, MidAmerican provided an immediate $1 billion cash cushion.
