Constellation Energy Corporation, a major nuclear energy provider headquartered in Baltimore, announced Friday (Jan. 10) that it is acquiring Houston-based Calpine Corporation, a natural gas and geothermal resources electricity generator, for $26.6 billion.
The firm acquired Calpine from Energy Capital Partners, a New Jersey-based electricity and sustainable infrastructure-focused investment firm which acquired Calpine in March 2018 in a $17 billion take-private deal.
This recent deal is one of the most significant in the clean electricity generation sector, and the combination will effectively create one of the nation’s largest clean energy providers.
“By combining Constellation’s unmatched expertise in zero-emission nuclear energy with Calpine’s industry-leading, best-in-class, low-carbon natural gas and geothermal generation fleets, we will be able to offer the broadest array of energy products and services available in the industry,” Joe Dominguez, president and CEO of Constellation, said in a recent release.
The acquisition cost includes an equity purchase price of $16.4 billion, comprised of 50 million shares of Constellation stock. It also includes $4.5 billion in cash and encompasses Constellation, assuming $12.7 billion of previously held debt from Calpine. With cash generation by Calpine before closing, along with and anticipated tax benefits, accounting for the estimated net purchase price of $26.6 billion.
Constellation’s advisors on the deal included Lazard and JP Morgan, which served as the transaction’s financial advisors. The firm’s general counsel, Matthew Price, tapped Kirkland & Ellis as its outside legal counsel.
For Calpine, Evercore was its lead financial advisor, and Morgan Stanley, Goldman Sachs and Barclays served as additional financial advisors on the deal. On the legal side, Latham & Watkins and White & Case served as the firm’s outside legal counsel on the deal. Katherine Piper is Calpine’s general counsel.
The Kirkland team included corporate lawyers David Feirstein (New York), Doug Bacon (Houston/New York), Andy Calder (Houston), Zach Savrick (Houston), Michael Bassi (Houston) and Alec Manzer (Austin). It also included energy regulatory lawyers Damien Lyster (Houston) and Cassidy Hall (Washinton, D.C) and executive compensation lawyers Stephen Jacobson (Houston/New York) and Karsten Busby (Dallas). Furthermore, capital markets lawyers Matthew Pacey (Houston) and Anthony Sanderson (Washington, D.C./Houston), debt finance lawyers Rachael Lichman(Houston) and Charles Martin (Houston), and tax lawyers Dean Shulman (New York) and Mark Dundon (Houston) contributed to the deal.
Gibson & Dunn advised Lazard on the deal with a Houston-based team led by partner Hillary Holmes and associates Stella Tang and Mariana Lozano.
The Latham & Watkins advised both Calpine and Energy Capital Partners was an all-New York corporate deal team by partners David Kurzweil and Edmond Parhami.
The White & Case deal team that advised Calpine included partners Michael Shenberg (New York), Mingda Zhao (Houston), Henrik Patel (New York), Morton Pierce (New York), Emilio Grandio (Houston), Ipek Candan Snyder (New York), Rebecca Farrington (Washington, DC), David Dreier (New York), Joel Rubinstein (New York) and Jason Rocha (Houston). The team also included partners Jason Rocha (Houston) and Laura Katherine Mann (Houston).
Following the close of the transaction, Calpine will remain headquartered in Houston, and Constellation will stay in Baltimore.
By adding Calpine and its assets, including one of the largest low-emission natural gas generators and its expanded renewable energy portfolio, Constellation will enhance its ability to produce clean and reliable energy nationwide. This will enable Constellation to deliver significant benefits to its shareholders and add over $2 billion of free cash flow annually.
The deal will also help the firm enhance its ability to supply retail electricity, and through the acquisition, it will now be able to offer and provide over 2.5 million customers nationwide with a wider variety of energy and sustainable solutions to help manage costs.