EDF bids for purchasing assets worth $6.5 billion from Constellation
EDF or Electricite de France SA has offered to buy assets worth $6.5 billion from Constellation Energy Group Inc. According to those who are familiar with this matter, an earlier bid from the French energy giant was turned down by Constellation which preferred a takeover by Mid American Energy Holdings Co. of Warren Buffett.
Constellation is at the center of attention as both the EDF, one of the largest nuclear utility and MidAmerican, a unit of Berkshire Hathaway Inc is attempting to acquire this company. This development comes three weeks ahead of voting by the shareholders of Constellation on the MidAmerican deal worth $4.7 billion. According to shareholders, the company is grossly undervalued in this deal. Early Wednesday will see EDF putting forth its offer.
With this bold move against Mr.Buffet, Pierre Gadonneix, chairman of EDF will be looking to regain some of the losses suffered by his company which holds a 9.5 percent stake in Constellation and also go on a joint venture to expand and establish its nuclear power empire in America.
There is reason for EDF to believe its offer is far superior to that of MidAmerican, in fact almost double of what is being offered by them. Immediate action would entail injecting $1 billion as an exchange for preferred shares. This will act as EDF offer’s down payment towards a fifty percent stake in the nuclear power sector of Constellation.
The offer made by EDF does not depend effectively on its fund raising abilities. The transaction is expected to be financed with EDF’s already existing credit and cash resources.
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