Constellation picked MidAmerican's bid over EDF's $35-a-share offer with two American private equity firms, contending that MidAmerican's offer was superior because of Buffett's stabilizing effect on a skittish market and the likelihood of easier regulatory approval.
In filings yesterday, Constellation painted a bleak outlook for its survival if shareholders don't approve the deal with MidAmerican, including losing $1.4 billion in financing.
"We are focused on completing our merger with MidAmerican Energy Holdings and, beyond that, we cannot comment on market rumor and/or speculation," Constellation spokesman Rob Gould said last night.
Several state officials, including Gov. Martin O'Malley, welcomed the Constellation sale to MidAmerican as a way to avert a potential crisis. Buffett met with O'Malley on Sunday night at the governor's mansion in Annapolis in what aides described as a "get-to-know-you" session.
O'Malley said they did not discuss the regulatory process.
"They still have to go through that regulatory process at the Public Service Commission," O'Malley said. "Our conversations were much broader and related to our country's energy future really. It was a much more macro and global conversation than the details of PSC approval."
But in recent weeks, some shareholders have wondered whether Constellation would survive as a stand-alone company, given that it is trying to raise added cash through asset sales and reduce exposure to its risky commodities-trading operations.
And shareholders have filed more than a half-dozen lawsuits against Constellation and its management, saying the $26.50-per-share price is too low.
After mulling its options, EDF decided not to make another bid in October, citing the difficult credit market. But EDF also left a small opening, saying it would review all possibilities.
EDF nearly doubled its stake in Constellation to 9.5 percent in August, paying $68.49 per share. It lost more than $340 million in three weeks under the offer from MidAmerican.
The state-controlled French company has been taking steps to protect its equity interest as well as its joint venture with Constellation to build new nuclear reactors in the United States.
It has a voice in the regulatory approval process at the PSC, which plans to make a decision about the MidAmerican deal by April 15. EDF hired a Washington attorney who is a former PSC chairman to represent the company before the PSC. It also hired Annapolis lawyer Joel. D. Rozner of Rifkin, Livingston, Levitan & Silver to be its local lobbyist.
