(Bloomberg) -- Constellation Energy Corp. shares surged to a record high after agreeing to acquire closely held Calpine Corp. for $16.4 billion in a deal that will create the largest fleet of US power stations.
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The stock soared as much as 26% Friday in New York in its biggest intraday increase ever, touching an all-time high of $306.42. Constellation agreed to pay a mixture of cash and stock, and assume about $12.7 billion of Calpine’s net debt in the deal, the companies said in a statement.
The stock surge underscores the value of reliable electricity. Constellation is expanding as energy consumption in the US is forecast to climb at the fastest pace in decades. Demand is expected to grow almost 16% over the next five years, driven by data centers running artificial intelligence operations, as well as the electrification of homes and cars and a shift away from fossil fuels in manufacturing.
“Post transaction, we’re the biggest fleet in the country,” Constellation Chief Executive Officer Joseph Dominguez said during a Friday conference call. “We’ll generate more electricity than any company in the US.”
Constellation operates natural gas and hydroelectric power facilities and the biggest US nuclear fleet, with a total 32.4 gigawatts of capacity. Buying Calpine will add 78 plants in 22 states with a generating capacity of 27 gigawatts, including the biggest US gas plant portfolio.
The share movement is notable given that Constellation’s stock price almost doubled last year, largely on optimism that the emergence of AI would continue boosting power consumption.
Rare Accretion
The stock jump also reflects the structure of the deal, according to Jefferies LLC analyst Paul Zimbardo. Constellation will pay $4.5 billion in cash, using funds on hand and cash flow generated by the acquisition. The transaction will boost Constellation’s operating earnings per share by more than 20% in 2026 and by at least $2 a share in future years, the companies said. Constellation is paying 7.9 times estimated 2026 earnings.
“To guide to 20% accretion is very rare,” Zimbardo said in an interview. “This is going to make a mega energy and electricity company.”
Bloomberg News first reported earlier this week that the companies were nearing a deal.