EDF teams up with KKR, TPG to make $6.2 billion counter bid for Constellation

23 September 2008

Electricite de France SA (EDF), Europe's biggest power producer, has teamed up with private equity firms KKR & Co and TPG Capital LP to make a $6.2 billion counter bid for American nuclear power producer Constellation Energy Group Inc.

The French company's offer is $8.50 per share or 32 per cent higher than the $4.7 billion ($26.50 per share) price that Warren Buffett's MidAmerican Energy Holdings Co agreed to pay last week. EDF already owns 9.5 per cent of Constellation. (See: Warren Buffett's MidAmerican Energy acquires Constellation Energy for $4.7 billion)

Constellation Energy chief executive Mayo Shattuck, told analysts on Monday that his company had accepted the offer from the Berkshire Hathway unit as it considered that to be the best offer on hand.

As per the agreement, announced on 18 September, MidAmerican Energy Holdings Co will pay $1 billion in cash today, to acquire 19.9 per cent stake in Baltimore-based Constellation. The acquisition would make the Buffet outfit the largest single shareholder in Constellation, displacing EDF.

The acquisition of a 19.9-per cent stake in Constellation would be made by exchanging preferred stock convertible to 10.4 per cent of voting equity and 5.6 per cent of non-voting equity convertible to voting equity and $750 million of senior notes paying 10 per cent interest.

Paris-based EDF said in a public filing that its offer was far superior to that of MidAmerican even as Shattuck and MidAmerican CEO Greg Abel told investors and analysts on a conference call that they expect to close their transaction in a year or less.