Constellation Energy Stock Soars on $26.6B Deal To Buy Rival Energy Producer Calpine

· Investopedia

Key Takeaways

  • Constellation Energy shares surged Friday after the company agreed to buy private energy company Calpine in a deal valued at $26.6 billion. 
  • The move expands Constellation's presence in California and Texas, creating the largest clean energy provider in the U.S.
  • The acquisition comes as energy stocks have surged over the past year, due in part to power demands from data centers to support artificial intelligence.

Constellation Energy (CEG) shares surged Friday after the company agreed to buy private energy company Calpine in a deal valued at $26.6 billion that it said will create the largest clean energy provider in the U.S.

The move expands Constellation’s foothold in Texas and California, as well as in the Northeast with Calpine’s natural gas and renewable energy portfolio. Constellation expects the combination to add more than $2 billion in adjusted free cash flow per year and $2 in earnings per share (EPS) beyond 2026.

The cash and stock transaction valued at $16.4 billion consists of $4.5 billion in cash alongside 50 million shares of Constellation stock. Constellation will also assume roughly $12.7 billion of Calpine net debt, bringing the net purchase price to $26.6 billion. 

The companies said the transaction is expected to close within 12 months.

Deal Comes as AI Data Centers Drive Power Demand

The acquisition is set to expand Constellation’s capacity at a time when power demand for artificial intelligence (AI) data centers in the U.S. is expected to triple by 2030, Mizuho Research analysts said last year.

The rise in demand for AI applications has driven shares of Constellation and other energy providers like Duke Energy (DUK) and NextEra Energy (NEE) higher over the past year. 

Constellation shares were up over 23% at $300.50 in intraday trading Friday and have more than doubled in value over the past 12 months.

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