Constellation: Merger critical for continued business
Constellation has begun in earnest the job of trying to sell its merger with Warren Buffett's MidAmerican Energy Holdings at the price of $26.50 a share, down from $107 not too long ago. Shareholders vote on the deal Dec. 23.
In a presentation to investors released this morning, Constellation makes two main points:
-- Failure to complete the merger could result in material challenges for continued business operations.-- Market conditions continue to deteriorate, making completion of the transaction even more critical.
"Material challenges for continued business operations" means a threat of bankruptcy. "Market conditions continue to deteriorate" means Constellation, parent of BGE, would have trouble finding financing to go it alone.
To which I would add one more thing: Yesterday an analyst told me that $26.50 doesn't look as bad now as it did in September, when the deal was struck. That's because share prices of other electricity companies have also plunged, along with the general market. To wit: Exelon Corp. has fallen from $75 three months ago to $50 now.
Comments
Your reasoning that $26.50 does not
look as bad now because the whole
market has dropped is almost too ridiculous to answer.Don't you think the stock market will recover? Buffett gives nothing away.I look forward to voting against the merger.There also is another offer in the paper today.
Posted by: Richard Davis | December 2, 2008 11:14 PM
Your reasoning that $26.50 does not
look as bad now because the whole
market has dropped is almost too ridiculous to answer.Don't you think the stock market will recover? Buffett gives nothing away.I look forward to voting against the merger.There also is another offer in the paper today.
Posted by: Richard Davis | December 2, 2008 11:14 PM
CEG managers hope to make a quick sale and get out of town to look for other opportunities to fleece some other group of consumers. The financial whiz kids on Wall Street and in the board rooms of utilities like Enron and Constellation Energy Group should be held accountable for stealing people's hard earned money for the past ten to twenty years- but it ain't gonna happen. I believe the State of Maryland should develop our own public/private utility that invests in new forms of power generation that will compete with and keep whoever ends up owning BGE honest with the consumers. Let's start with the State and Baltimore City developing a few new, modern co-generation power plants in the city like the one they have at the University of Maryland.
Posted by: Rayburn Brown | December 3, 2008 5:53 AM
Cry me a river, CEG. My BGE bill has only gone up these past couple of years, and yet you're facing bankruptcy? Give it a rest.
Posted by: Dyspeptic Skeptic | December 3, 2008 2:22 PM