Constellation Energy, a leading US nuclear power producer, has agreed to acquire gas-fueled rival Calpine in a deal valued at $27 billion, including debt. The acquisition is part of a larger trend towards increased demand for electricity and the role of artificial intelligence in shaping energy markets.
Calpine’s fleet can buy natural gas cheaply and sell electricity at high prices, making it an attractive target for Constellation. The deal provides geographic diversification and taps into growing demand in Western states, such as Texas. Size also plays a key role, as building equivalent projects would require significant time and money.
The acquisition is valued at 8 times Calpine’s projected 2026 earnings before interest, taxes, and depreciation (EBITDA), which translates to an implied $10 billion discount for Constellation. Private equity sellers rarely leave money on the table in such deals.
While some experts have cited AI-driven demand as a key factor in the acquisition, it is essential to note that this trend may not necessarily be sustainable. Nevertheless, the deal provides Constellation with a significant price and helps mitigate potential risks by utilizing its own stock as part of the currency.
The acquisition marks another major move in the energy sector’s shift towards increased demand for electricity, driven by factors such as US manufacturing growth and energy-transition pursuits.
Source: https://www.reuters.com/breakingviews/constellation-mega-deal-delicately-orbits-ai-sun-2025-01-10