The US nuclear power giant Constellation Energy has agreed to buy the natural gas and geothermal firm Calpine Corporation for $16.4bn, one of the biggest takeovers in the US power industry.
The acquisition would combine two of the biggest electricity generators in the US into the largest independent power provider in the country, with some 2.5 million customers.
It comes amid surging electricity demand, driven by the proliferation of energy-guzzling AI data centers and electric transportation and buildings. Including debt, the transaction valued Calpine at $26.6bn.
“Demand for our products is expected to grow by levels we haven’t seen in a lifetime,” said Joe Dominguez, the Constellation CEO, on a call with investors following the announcement.
Andrew Novotny, the CEO of Calpine, claimed the deal was a “win for every American family and business”. The combined company would be “better positioned to bring accelerated investment in everything from zero-emission nuclear to battery storage that will power our economy”, he added, “in a way that puts people and our environment first”.
Shares in Constellation Energy rose 23% in New York. Calpine is a privately held business, backed by three investment firms: Canada Pension Plan Investment Board, Energy Capital Partners and Access Industries.
The deal is expected to close in the second half of this year, expanding Constellation’s workforce by about 20% to 16,500 and significantly increasing its market share in Texas and California, the two most populous, and energy-consuming, US states. “Overall, the transaction creates the largest coast-to-coast power generator,” S&P’s Aneesh Prabhu said.
Shares of Constellation have more than doubled over the past year as big tech, many with climate-related pledges that require low-carbon power purchases, have driven up demand for nuclear power, which produces virtually no global warming emissions.
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In September, Constellation announced an unprecedented power purchase agreement to resume operations at its Three Mile Island nuclear plant to supply electricity to Microsoft data centers.
Reuters contributed reporting