Constellation Clears Final DOJ Hurdle In $16.4B Calpine Takeover To Build America’s Largest Power Fleet

• Under the DOJ resolution, the companies will divest two natural gas plants, York 2 in Pennsylvania and Jack Fusco in Texas.
• The companies had already offered to divest four of Calpine’s power plants in the Mid-Atlantic region as part of a separate agreement with the Federal Energy Regulatory Commission.
• The acquisition, involving both stock and cash payments, would create the country’s largest power fleet.

Constellation (CEG) on Friday said that it has cleared the final regulatory step to complete the $16.4 billion acquisition of Calpine Corporation announced earlier this year in a bid to create the country’s largest power fleet.

The company said that it has reached a resolution with the U.S. Department of Justice on the conditions required to complete the acquisition.

The Settlement

As part of the resolution, Constellation has agreed to divest multiple assets including York 2, a 828-megawatt natural gas-fired, combined-cycle plant in Pennsylvania, as well as the Jack Fusco Energy Center, a 605-megawatt natural gas fired combined cycle facility located outside Houston, Texas.

The company also agreed to divest a minority ownership interest in the Gregory Power Plant, a 385-megawatt natural gas-fired combined cycle near Corpus Christi, Texas. Constellation expects to receive attractive value for the sale of the assets. Constellation and Calpine can begin to close the transaction once the court has signed the stipulation and order agreed to by them and DOJ.

DOJ said that the settlement resolves the Antitrust division’s concerns that the acquisition would harm competition and lead to higher prices on consumers reliant on the ERCOT and PJM electricity grids.

Previous Divestment Commitments

The company received necessary regulatory approvals from the Federal Energy Regulatory Commission, the New York Public Service Commission and the Public Utility Commission of Texas earlier. The companies had already offered to divest four of Calpine’s power plants in the Mid-Atlantic region as part of a separate agreement with the Federal Energy Regulatory Commission.

The acquisition involves both stock and cash payments.Together, Constellation and Calpine will have nearly 60 gigawatts of capacity from zero- and low-emission sources, including nuclear, natural gas, geothermal, hydro, wind, solar, cogeneration and battery storage, the companies said in January.

How Did Stocktwits Users React?

CEG shares closed down 3% on Friday. On Stocktwits, retail sentiment around CEG fell from ‘neutral’ to ‘bearish’ territory over the past 24 hours, while message volume stayed at low levels.

CEG stock is up by 61% this year and by about 41% over the past 12 months. 

Also See: Meta Acquires AI Wearables Startup Limitless AI

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