Constellation Energy Group, which agreed to sell itself to Warren Buffett's MidAmerican Energy Holdings Co. three months ago in the midst of a financial crisis, said yesterday that it will begin talks with its largest shareholder about its unsolicited alternative bid to acquire half of the Baltimore energy company's nuclear business.
Electricite de France, a state-owned utility that owns 9.5 percent of Constellation stock, offered its plan last week as an alternative to MidAmerican's $4.7 billion takeover.
Yesterday's announcement raises more doubt about Constellation's deal with MidAmerican. Just by talking to EDF, Constellation's board is showing it may be willing to pay MidAmerican hundreds of millions of dollars to escape their deal, an analyst said.
"At this stage in the game, it has to be an all or nothing commitment to either pursue [the EDF] deal to the fullest extent or go with MidAmerican," Morningstar analyst Paul Justice said yesterday. "At this point, they've decided that the EDF offer is more appealing of the two."
EDF said it would pay $4.5 billion for 50 percent of Constellation's nuclear power assets, including an immediate down payment of $1 billion in cash. Constellation also would have an option to sell several non-nuclear power plants to EDF for as much as $2 billion, according to the proposal, which values the entire company at $52 a share. That is about twice the value MidAmerican places on Constellation.
The rest of Constellation, including Baltimore Gas and Electric Co. and its coal- and natural-gas power generation business, would continue to operate as a publicly traded, Baltimore-based company. Kelly Sullivan, an EDF spokeswoman, said the company welcomes discussions with Constellation about its competing bid.
Constellation's board of directors rebuffed EDF's earlier $35-a-share offer for the entire company. Yesterday, it said in a statement that its decision to begin immediate discussions with EDF "is consistent with its fiduciary responsibilities to shareholders, as well as its responsibilities under its definitive merger agreement with MidAmerican."
But the board also noted that it has not withdrawn, modified or qualified its recommendation that shareholders vote in favor of the MidAmerican deal.
A shareholder vote is scheduled for Dec. 23. Constellation spokesman Rob Gould declined to comment further yesterday.
