Constellation is set to acquire Calpine, a provider of natural gas and geothermal energy, in a deal valued at $16.4 billion, merging two of the leading power companies in the United States.
This acquisition positions the combined entity as the foremost retail electric supplier in the nation, catering to 2.5 million customers. The geographical reach will extend across the continental United States, with a bolstered presence in Texas—currently the fastest-growing market for electricity demand—as well as other strategically vital states, such as California, Delaware, New York, Pennsylvania, and Virginia.
Under the agreement, Constellation will purchase Calpine using 50 million of its own shares and $4.5 billion in cash, while also inheriting approximately $12.7 billion in Calpine’s debt. The overall valuation of this transaction totals about $26.6 billion.
The new entity is expected to operate with nearly 60 gigawatts of capacity derived from low- and zero-emission sources, which encompass a diverse range of energy generation methods, including nuclear, natural gas, geothermal, hydroelectric, wind, solar, cogeneration, and battery storage.
Joe Dominguez, the CEO of Constellation, expressed his enthusiasm for the merger, stating that by fusing Constellation’s dominance in zero-emission nuclear technology with Calpine’s top-tier, low-carbon natural gas and geothermal resources, the combined company will provide a wider assortment of energy products and services than any competitor in the market.
The merger is projected to generate over $2 billion in free cash flow annually, enabling the companies to leverage strategic capital for reinvestment in their operations.
Andrew Novotny, CEO of Calpine, noted the advantages of joining forces, highlighting that this collaboration will allow accelerated investments that cover everything from zero-emission nuclear energy to battery storage, in a manner that prioritizes both people and the environment.
The closing of this transaction is anticipated to occur within a year from the time it is officially signed but will require approvals from several regulatory bodies, including the Federal Energy Regulatory Commission, the Canadian Competition Bureau, the New York Public Service Commission, and the Public Utility Commission of Texas, among others.
Calpine, a privately held company, is headquartered in Houston. Following the announcement, shares of Constellation Energy Corp., located in Baltimore, experienced a notable surge of over 13% before the trading session began.
