CEG to be sold to be sold to MidAmerican
The press release:
DES MOINES, Iowa & BALTIMORE--(BUSINESS WIRE)--MidAmerican Energy Holdings Company and Constellation Energy (NYSE: CEG - News) today announced the companies have reached a tentative agreement in which MidAmerican will purchase all of the outstanding shares of Constellation Energy for a cash consideration of approximately $4.7 billion, or $26.50 per share. The companies expect to enter into a definitive merger agreement by close of business, Sept. 19. Upon signing a definitive merger agreement, Constellation Energy will issue $1 billion of preferred equity yielding 8 percent to MidAmerican.The tentative agreement, which has been unanimously approved by both companies’ Boards of Directors, is subject to further due diligence, as well as shareholder and customary federal, state and local regulatory approvals. The transaction is expected to close within nine months.
“We strongly believe this transaction is in the best long-term interest of our investors, employees and the customers and communities we serve,” said Mayo A. Shattuck III, chairman, president and chief executive officer for Constellation Energy. “The financial services sector and energy commodity markets have witnessed unprecedented volatility. Backed by the significant industry expertise and financial stability of MidAmerican and Berkshire Hathaway, Constellation Energy will build on its reputation as a first-choice energy solution provider for our many customers.”
“MidAmerican has been a wonderful steward of its energy assets and the acquisition of Constellation Energy, when completed, will prove beneficial to all constituents,” said Warren E. Buffett, chairman, Berkshire Hathaway.
“In Constellation Energy, we have a partner that brings a world-class organization of people and an industry-leading collection of energy assets,” said Gregory E. Abel, president and chief executive officer of MidAmerican Energy Holdings Company. “MidAmerican is very comfortable with, and committed to, Constellation Energy’s current strategic plan. We intend, as with all of our investments, to allow Constellation Energy to operate autonomously as it pursues its long-term goals. Constellation Energy’s premier fleet of nuclear assets, and its UniStar joint venture with EDF, complements MidAmerican’s ongoing commitment to environmental initiatives, including investments in hydro, wind and geothermal energy. Joining forces with Constellation Energy accelerates our strategic initiative to develop and build energy infrastructure assets in North America.”
Comments
Well, Mr Shattuck finally succeeded in screwing Baltimore.
Posted by: Robert | September 18, 2008 10:35 AM
Not sure what you're talking about Robert. It sounds like Constellation will stay in Baltimore.
Posted by: CEG Employee | September 18, 2008 3:49 PM
Oh, CEG will still be a Fortune 500 company? Did I miss something? As the child of a BGE employee with 40 years of service before retirement and the only job he ever had, its very sad. But then CEG hasn't been a utility company for years. Commodity trader, yes. And Mr Shattuck will probably walk away with millions lining his pockets after killing a company that goes back to 1816 (if I remember my history.) And over-paid CEO wonder why they are hated. (Mr Hancock, how much of this will you censor? I heard you did it a lot.)
Posted by: Robert | September 18, 2008 9:52 PM
I am a bit confused. If the sales is going to take place, why would the stock not be a bargin today at $22, today, when you know that when the deal closes you will be taken out at $26.50?
What am i missing???
Posted by: Jon in FL | September 19, 2008 10:50 AM
When Mayo Shattuck took over in November 2001, CEG stock was selling for $23 per share. The bailout offer is $26.50, a gain of $3.50 per share. There are about 177 million shares outstanding (Buffet's 4.7B divided by 26.5), so the net gain in value for shareholders is approximately 621 million dollars. During the same time frame, the top 3 at CEG received compensation and bonuses that had to approach 100 million. So it's 100 million for them, and 621 million for the rest of us. And now Shattuck could receive 10's of millions more in severance.
Posted by: Sam | September 20, 2008 11:21 AM
What if the shareholders do not approve the merger? Is that even a possibility? Aren't there lawsuits pending by some shareholders? Can these lawsuits have an effect on the outcome?
I am angry that 11 months ago, I had enough money to pay for 5 semesters of my son's law school's tuition. Now, there will only enough for 1 semester - barely....
Posted by: Marta Iwashko | December 3, 2008 2:31 PM