(Bloomberg) -- Constellation Energy Corp. is nearing an acquisition of Calpine Corp., people familiar with the matter said, in what would be one of the biggest ever deals in the power generation sector.
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Baltimore-based Constellation is in discussions with Calpine’s private equity owners about the terms of a transaction that could value the company at about $30 billion including debt, according to the people. A deal may be announced in the coming weeks, they said.
Energy Capital Partners, CPP Investments and Access Industries agreed to take Calpine private in 2017 in a deal valued at more than $17 billion including debt. Shares in Constellation have more than doubled over the last 12 months. After sinking as much as 11% Wednesday on news of the potential Calpine transaction, the shares closed down 4.6% to $243.84 in New York trading, giving Constellation a market value of about $77 billion.
Founded in the 1980s, Calpine runs almost 80 facilities across 22 states and Canada, according to its website. The company generates electricity from natural gas and geothermal resources that helps power roughly 27 million homes every year.
After decades of flat US power demand, the need for electricity is skyrocketing thanks to data centers running artificial intelligence operations, new factories and the electrification of everything from cars to home heating. US demand for electricity will surge almost 16% over the next five years, according to a December report for Grid Strategies.
Rare Opportunity
Constellation views Calpine as a rare opportunity to expand its power generation capabilities amid soaring electricity demand, the people said, adding that the companies began talking in recent months.
The cash-and-stock deal would be highly accretive to Constellation’s earnings-per-share while diversifying its fleet of plants by geography and fuel-type, as Calpine is heavily weighted toward natural gas, the people added.
Constellation’s deliberations over a deal for Calpine are ongoing and could still be delayed or falter, the people said, asking not to be identified discussing confidential information. The final price of a deal could still change, they said.
Representatives for Constellation, CPP and ECP declined to comment. Spokespeople for Access Industries and Calpine couldn’t immediately be reached for comment or didn’t immediately provide a comment.