Constellation Energy Is Back in Play
Hmm, Constellation Energy (CEG) is moving quite substantially over the Buffett bailout bid of $26.50... now approaching $29. Maybe this $35 bid from EDF still has some merit - the market seems to be signaling this. From Reuters:
- French power group EDF could still win Constellation Energy by drumming up support from the U.S. utility's shareholders to reject an agreed $4.7 billion bid from Warren Buffett. Consultants and analysts say Constellation stockholders may seek to overturn the company's decision to accept the bid by Buffett's MidAmerican Energy Holdings and push management to go for the higher French-backed bid instead.
- "EDF is still in a privileged position to challenge the adherence to shareholder interests, because ... the bottom line is that EDF's offer is higher," said Patrice Lambert de Diesbach, an analyst at French bank CM-CIC. EDF already owns 9.5 percent of Constellation Energy Group Inc (CEG) via a joint venture between the two groups and sees an increased stake as its gateway into the U.S. market, where it wants to introduce new generation pressurised nuclear reactors.
- A proposed $35-a-share or $6.24 billion offer from the French group and its backers, as notified in a filing with the U.S Securities and Exchange Commission, would top the $26.50 per share or $4.7 billion cash bid from MidAmerican by a third but was rejected by Constellation.
- Other potential obstacles to EDF are U.S. regulations which bar majority foreign ownership of nuclear assets, but the Financial Times reported this week EDF was working on the structure of a bid vehicle to comply with these requirements.
Interesting. At $28.75 there is $2.25 downside if the EDF deal falls through and $6.25 upside if the EDF deal is accepted. I also wonder if Buffett would come back with a $31-32 type of offer that calms down the shareholders while still offering the same Buffett backing and lack of foreign ownership issues for regulators.
Disclosure: No position
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This article has 2 comments:
- Louis Rukeyser
- 2 Comments
Oct 04 02:03 PMMy perspective going forward is if merger does close at 26.5 I hope to receive at least two quietly dividends while waiting for it to close. 26.5 + 1 (dividend) = 27.5 if it takes nine months to close than its 28. If it pops to thirty anytime in the next week I'll cash out considering the uncertainty that would most likely surround the new deal & the time value of money involved.
Good luck with that!
- Louis Rukeyser
- 2 Comments
Oct 04 02:18 PM