Constellation will acquire Calpine in a cash and stock transaction valued at an equity purchase price of $16.4bn.
This is composed of 50 million shares of Constellation stock and $4.5bn in cash, plus the assumption of $12.7bn of Calpine net debt.
Constellation plans to fund the cash portion of the transaction using a mix of available cash and cash flow generated by Calpine from the time of signing until the deal’s closure.
After accounting for cash expected to be generated by Calpine between signing and the expected closing date, along with the value of tax attributes at Calpine, the net purchase price is $26.6bn.
The transaction is expected to close by January 2026, subject to regulatory approvals and the completion of customary closing conditions.
Constellation president and CEO Joe Dominguez stated: “This acquisition will help us better serve our customers across America, from families to businesses and utilities.
“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.”
The agreement will create the largest clean energy provider, serving 2.5 million customers with customised energy solutions and products to manage costs and support sustainability goals.
The transaction will deliver benefits to Constellation’s owners, with expected immediate adjusted (non-generally accepted accounting principles [GAAP]) operating earnings per share (EPS) accretion of more than 20% in 2026 and at least $2 per share of EPS accretion in future years.
It is projected to add more than $2bn (non-GAAP) of free cash flow annually, creating strategic capital and scale to reinvest in the business.
Calpine president and CEO Andrew Novotny stated: “This is an incredible opportunity to bring together top-tier generation fleets, leading retail customer businesses and the best people in our industry to help drive a stronger American economy for a cleaner, healthier and more sustainable future.
“Together, we will be better positioned to bring accelerated investment in everything from zero-emission nuclear to battery storage that will power our economy in a way that puts people and our environment first.”
Calpine’s major shareholders, including ECP, CPP Investments and Access Industries, have agreed to an 18-month lock-up on their Constellation equity, with a schedule for potential sales.
Lazard and JP Morgan Securities are serving as financial advisors to Constellation, with Kirkland & Ellis as legal counsel.
Evercore is the lead financial advisor to Calpine, supported by Morgan Stanley, Goldman Sachs, and Barclays US as additional financial advisors, and Latham & Watkins and White & Case as legal counsel.
