Wednesday December 17, 08:49 PM
France's EDF to buy Constellation nuclear assets for 4.5 bln
NEW YORK (AFP) - US-based Constellation Energy Group accepted a 4.5-billion-dollar (3.15-billion-euro) offer from France's EDF (Paris: FR0010242511 - news) for a 49.99 percent stake in its nuclear power business, the companies said Wednesday.
Constellation backed out a deal with renowned US investment manager Warren Buffett, whose energy group MidAmerican Energy Holdings Company had offered 4.7 billion dollars for the whole company.
A statement from the French firm said the deal would "enhance Constellation Energy (NYSE: CEG - news) 's long-term stability and liquidity position" and extend "the EDF Group's nuclear expertise in the United States."
Constellation, a top US electricity supplier, said it would pay some 1.2 billion dollars to break off the merger with Mid-American in a combination of cash, bonds and shares to be declared in the fourth quarter of 2008.
A general meeting of Constellation's shareholders would also be convened Tuesday to approve the compensation to MidAmerican, 87 percent owned by Buffett's Berkshire Hathaway Inc.
Constellation and MidAmerican said in a joint statement they were amicably terminating a merger agreement struck on September 19, 2008.
Three days after the agreement, MidAmerican provided one billion dollars to Constellation to tide through its financial problems.
"We were pleased to have been able to quickly provide a significant amount of capital that was critical to Constellation Energy as they went through unprecedented financial times," said Gregory Abel, MidAmerican chief executive.
"We appreciate the relationships we have built with the Constellation Energy team and wish them success as they pursue an alternative transaction," he said.
EDF's interest in Constellation will be structured as a new joint venture, separate from the existing UniStar joint venture, officials said.
Under the terms of the agreement announced Wednesday, EDF will also move to shore up Constellation's financial position.
EDF will make an immediate one billion cash investment in Constellation as part of the deal, a statement said.
The two companies also agreed on a two-year option allowing Constellation to sell to EDF up to two billion dollars of non-nuclear generation assets.
They expect to receive the necessary regulatory approvals for EDF's acquisition of Constellation's nuclear power arm in six to nine months.
Constellation owns 3,869 megawatts of nuclear generating capacity in the United States.
"This agreement with EDF Development Inc. provides an opportunity for Constellation Energy shareholders to achieve greater value for the company's significant asset base," said Mayo Shattuck, Constellation's chief executive.
The French state owns around 85 percent of EDF, the world's biggest producer of nuclear energy.
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