Disgruntled Constellation Energy Group shareholders may support French energy firm Electricite de France’s renewed offer for the Baltimore company this week, according to media reports.
That offer was at the center of another wild week for Baltimore’s biggest company, which saw a $4.7 billion, $26.50-a-share buyout offer countered by EDF, its largest individual shareholder.
EDF seeks to buy half of Constellation’s nuclear energy business for $4.5 billion, nearly the same price offered for the entire company by Warren Buffett’s MidAmerican Energy Holdings Co. in mid-September. At that time, Constellation was on the brink of collapse, but has since begun unwinding its riskier businesses including its energy commodities trading division. EDF said it also values Constellation at $52 a share, twice Buffett’s offer.
The EDF deal would allow Constellation to survive as an independent company, and perhaps allow shareholders to regain some of the losses taken when company stock slid from a high of $108 a share earlier this year. A shareholder vote has been scheduled for Dec. 23.
Citing an unnamed source close to the French company, media reports on Friday said that a bloc of Constellation’s 20 largest shareholders share the view that Buffett’s offer “grossly underestimates” the value of the company. Those shareholders control approximately 50 percent of Constellation’s equity, the source said. EDF is Constellation’s largest shareholder, controlling 9.5 percent of the company.
The nation’s major credit-rating agencies on Friday continued to evaluate Constellation’s standing in light of the EDF proposal. Fitch Ratings was concerned that a rejection of the MidAmerican deal would incur a $593 million hit to Constellation that it might not survive, while others tried to measure the uncertainty surrounding the deal.
The merger agreement allows MidAmerican to terminate the merger if Constellation’s board of directors withdraws its recommendation to shareholders to approve the merger, or approves, recommends or enters into an agreement with anyone but MidAmerican.
The agreement allows Constellation to consider unsolicited bids such as EDF’s if the board considers it a “superior proposal.” MidAmerican would then have five days to counter the offer.
However, MidAmerican Chairman David Sokol told Bloomberg News on Wednesday that the company has “no intention to alter our bid.”
