Constellation announces $26.6 billion deal to buy Calpine, Houston's largest private company
Calpine, the largest private company in Houston, announced a deal to be acquired by Baltimore-based Constellation for approximately $16.4 billion Friday morning.
Constellation would buy Calpine with 50 million of its shares and $4.5 billion in cash, as well as assume approximately $12.7 billion of Calpine's debt, according to a Friday joint statement. In total, the deal would be valued at approximately $26.6 billion, the companies said.
Separately, the two companies are already among the largest power generation companies in the country, though with different specialties. Calpine predominantly owns natural gas power plants and also leads in geothermal power generation, while Constellation has the largest fleet of nuclear power plants in the country.
Together, the two companies would have nearly 60 gigawatts of capacity from so-called “zero- and low-emission sources,” including nuclear, natural gas, geothermal, hydro, wind, solar and battery storage. The combined company footprint would span the continental United States and “significantly” expand Constellation’s presence in Texas, the fastest growing market for power demand thanks to the state’s population and economic boom, according to Friday’s joint statement.
“We will be able to offer the broadest array of energy products and services available in the industry,” Constellation CEO Joe Dominguez said in the statement. “Both companies have been at the forefront of America’s transition to cleaner, more reliable and secure energy, and those shared values will guide us as we pursue investments in new and existing clean technologies to meet rising demand.”
Andrew Novotny, Calpine’s CEO since previous CEO Thad Hill retired in October, called the deal “an incredible opportunity” toward a cleaner 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,” Novotny said in Friday’s statement.
The deal comes as the country reckons with a surge in electricity demand, much of it driven by power-hungry data centers popping up to support the development of artificial intelligence technologies. This phenomenon has emerged as an opportunity for power generation companies, but is also risking climate goals since the additional demand could give new life to fossil fuel power generation.
Calpine’s natural gas power plants “will play a key role in maintaining grid reliability for decades to come as customers transition to cleaner energy sources,” the companies said in their joint Friday statement. Calpine has approximately 26 gigawatts of gas-fired generation, with 9.6 gigawatts of that in Texas.
In Texas, Calpine has been selected as a finalist for a low-interest loan from the state’s taxpayer-backed fund supporting new gas-fired generation. If finalized, the loan would go toward Calpine building an approximately 460-megawatt gas plant at its Freestone Energy Center outside Dallas, a project that Gov. Greg Abbott and the CEO of the Texas power grid operator have touted as an example of Texas’ efforts to improve grid reliability.
Constellation, meanwhile, is planning to add more zero-emission power to the grid by exploring new advanced nuclear projects, investing in renewables and increasing the output of existing nuclear plants, according to Friday’s statement. The Baltimore company also announced a deal in September to restart its Three Mile Island facility, the site of the country’s most notorious nuclear accident, to power Microsoft’s data centers.
If approved, the acquisition between Calpine and Constellation would also create the nation’s leading competitive retail electricity supplier serving 2.5 million customers, according to Friday’s statement.
Constellation would continue to be headquartered in Baltimore and would maintain a “significant” presence in Houston, Calpine’s current headquarters, according to Friday’s statement.
The deal is expected to close within 12 months of signing and is still pending approval from the Federal Energy Regulatory Commission, the Canadian Competition Bureau, the New York Public Service Commission, the Public Utility Commission of Texas and other regulatory agencies, the companies said Friday.