With a crucial shareholder vote on its $4.7 billion merger less than a month away, Constellation Energy officials will spend the next month convincing investors and employees to back the deal.
The company said it will work to reassure both individual shareholders and larger brokers, banks and mutual funds.
“During the next few weeks, we will [be] meeting and corresponding with institutional and retail shareholders alike to demonstrate that the $26.50 per share offer by MidAmerican is the best alternative for Constellation Energy and its shareholders, many of whom are based here in Baltimore and Maryland,” Constellation spokesman Rob Gould said in a statement.
At least half a dozen shareholders filed suit after Constellation accepted a $26.50 a share buyout offer from Warren Buffett-controlled MidAmerican Energy Holdings Co. in mid-September. That price was a significant discount from the company’s 52-week high of $108 a share, coming amid severe concerns over the company’s liquidity.
A short time later, Constellation’s largest shareholder, Electricite de France, said it was prepared to offer $35 a share for the company, fanning the flames of investors’ discontent.
Analysts said shareholders may have calmed since that time as the credit markets have sunk even further, but the pitch to investors might be an important piece of getting the deal approved.
“It’s one of these cases where you’re not getting the takeover at a substantial premium … and shareholders might be a little skeptical,” said Paul Justice, an analyst for Chicago-based Morningstar. “I’m not surprised they’re taking this move, in fact it might be very necessary for closure.”
In a letter to Constellation employees filed this week with the Securities and Exchange Commission, President, Chairman and Chief Executive Officer Mayo Shattuck touted the benefits of the deal, calling on them to be “an ambassador” for the merger.
Among its benefits, Shattuck cited MidAmerican’s promise that Constellation and subsidiary Baltimore Gas and Electric will operate autonomously, and that their headquarters will remain in Baltimore. He said the company has committed to delaying and reduce proposed rate increases and protect BGE employment.
“It is my view, and that of our management and Board of Directors, that the merger with MidAmerican is in the best near- and long-term interest of Constellation Energy and our many stakeholders,” Shattuck wrote.
