Constellation Energy Corporation CEG and Calpine Corp. announced that they have entered into a definitive agreement under which CEG will acquire Calpine in a cash and stock transaction valued at an equity purchase price of nearly $16.4 billion. It is composed of 50 million shares of CEG stock and $4.5 billion in cash, plus the assumption of nearly $12.7 billion of Calpine’s net debt.
The net purchase price is $26.6 billion, which represents an attractive acquisition multiple of 7.9x 2026 EV/EBITDA after deducting the cash that Calpine is projected to earn between the signing and the anticipated close date, as well as the value of Calpine's tax attributes.
As consumers switch to more sustainable clean energy sources, Calpine's low-emission natural gas facilities will be crucial to preserving grid resilience for decades to come. Both businesses have made early investments in carbon sequestration technologies to help guarantee that consumers can continue to be reliably powered by America's plentiful natural gas supply.
In addition to restarting the Crane Clean Energy Centre in Pennsylvania, Constellation Energy will invest in renewable energy, extend the life of current clean energy sources, explore new advanced nuclear projects, and increase the output of existing nuclear plants to boost the amount of zero-emission energy that is available to the grid.
Strategic Advantages of the Agreement
By creating the largest renewable energy supplier in the country, the deal makes it possible to provide a wider range of energy and sustainability solutions to more clients from coast to coast. Calpine, the biggest U.S. producer of energy from low-emission natural gas production, and an enlarged renewable energy portfolio, including the largest geothermal generation operation in the United States, will join Constellation Energy, which is already the country's largest producer of power that is emissions-free around-the-clock.
Constellation Energy and Calpine will have nearly 60 gigawatts (GW) of capacity from zero- and low-emission sources, including nuclear, natural gas, geothermal, hydro, wind, solar, cogeneration and battery storage. The combined company’s footprint will span the continental United States and include a significantly expanded presence in Texas.
This deal broadened CEG’s renewable portfolio, including the Geysers facility in Northern California, which is the largest geothermal generator in the United States. The combined company is poised for further growth, enhanced by its increased scale and cash flow.
Constellation Energy Strengthens Its Renewable Portfolio
The company’s generation fleet helps accelerate the nation’s transition to clean energy, with more than 33,094 megawatts (MW) of capacity and annual output that is 90% carbon-free. Its Midwest and Mid-Atlantic segments account for nearly 69% of total generation capacity. Constellation Energy operates 27 wind projects that can produce about 1,400 MW of electricity.
Constellation Energy is also focused on launching a $350 million initiative to increase the output and lifespan of the company's portfolio of renewable energy sources by enhancing efficiency, increasing output, and extending the life of its Criterion wind project in Oakland, MD, by 20 years. This action will deliver more carbon-free electricity to the area. Constellation Energy's repowering initiatives will allow 315 MW of its current carbon-free wind fleet to generate more power at the same wind conditions during the life of this fleetwide operation.
Other Companies’ Focus on Clean Energy
Per the U.S. Energy Information Administration, the annual share of U.S. electricity generation from renewable energy sources is expected to be 23% and 25% in 2024 and 2025, respectively.
Along with CEG, some other companies like Dominion Energy D, Duke Energy DUK and NextEra Energy NEE are also set to take advantage of the increasing demand for clean electricity.
Dominion Energy’s long-term objective is to add more battery storage, solar, hydro and wind (offshore and onshore) projects by 2036 and increase the renewable energy capacity by more than 15% per year, on average, over the next 15 years. Organic projects and acquired assets will further expand the company’s clean energy portfolio.
D’s long-term (three-to-five-year) earnings growth rate is 13.59%. The Zacks Consensus Estimate for 2025 earnings per share (EPS) indicates a year-over-year increase of 22.7%.
Duke Energy aims to bring 2.7 GW of battery storage into service by 2031 and 1.2 GW of onshore wind into service by 2033. Such solid renewable capacity maximization plans should enable the company to further bolster its footprint in the expanding renewable energy market.
DUK’s long-term earnings growth rate is 6.33%. The Zacks Consensus Estimate for 2025 EPS indicates a year-over-year increase of 6.8%.
In the third quarter of 2024, NextEra Energy expanded its contracted renewables backlog by adding nearly 3 GW of renewable projects. Its backlog additions include nearly 100 MW of wind projects, 1.4 GW of solar projects, 1.4 GW of battery storage projects and 100 MW of wind repowering.
NEE’s long-term earnings growth rate is 8.12%. The Zacks Consensus Estimate for 2025 EPS indicates a year-over-year increase of 7.7%.
CEG’s Stock Price Performance
In the past year, shares of CEG have risen 147.3% compared with the industry’s 76.1% growth.
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CEG’s Zacks Rank
The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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