Constellation Energy’s stock has been soaring since the company reached an agreement to buy Calpine, a move that will make Constellation the largest clean-energy provider in the United States. This acquisition also allows Constellation to offer a broader range of energy products.
The total cost of the deal is approximately $26.6 billion, including the assumption of Calpine’s debt. Calpine, which is a privately held company, now has an enterprise value of 7.9 times the earnings it is expected to generate in 2026 before accounting for interest, taxes, depreciation, and amortization.
On Friday, Constellation Energy’s stock rose by 23%, reaching $300.63. This surge puts the company on track to close at its highest level since going public in 2022. Generally, when a company makes an acquisition, its stock tends to drop due to the loss of cash and other associated costs. However, Constellation’s stock has increased, possibly because investors hadn’t fully anticipated the benefits of this major power-generation deal.
Looking ahead, Constellation expects this deal to add at least $2 per share in earnings and more than $2 billion in adjusted free cash flow each year. By purchasing Calpine, Constellation significantly strengthens its natural gas portfolio.
Calpine, based in Houston, is the largest generator of electricity in the U.S. from natural gas and geothermal resources. The company owns 27 gigawatts of generating capacity, enough to power about 27 million homes.
Constellation, based in Baltimore, is already the largest operator of nuclear power plants, which play a crucial role in the nation’s energy generation as the U.S. works towards carbon neutrality by 2050.
The company can power the equivalent of 16 million homes. In 2024, its stock rose by 93%, driven by the growing demand for electricity to power new AI data centers. Last year, Microsoft signed a deal with Constellation to meet the increasing electricity needs of its data centers.
Analysts have raised concerns that Constellation’s focus on nuclear power, which initially made the stock attractive, could now shift. However, the acquisition of Calpine could help Constellation become more competitive in the natural gas sector as well.
According to J.P. Morgan’s Kevin Kwan, the deal will broaden Constellation’s exposure to power supply and demand trends, which will likely benefit the company in the long term. The transaction is expected to close within 12 months, subject to necessary approvals.
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