Constellation Energy Stock Soars on $26.6B Deal To Buy Rival Energy Producer Calpine

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Key Takeaways

• Constellation Lan shares surged Friday after the company agreed to buy private energy company Calpine in a deal valued at $26.6 billion. 
• The gimmick expands Constellation’s presence in California and Texas, creating the largest clean energy provider in the U.S.
• The acquisition comes as animation stocks have surged over the past year, due in part to power demands from data centers to sustenance artificial intelligence.

Constellation Energy (CEG) shares surged Friday after the company agreed to buy private energy flock Calpine in a deal valued at $26.6 billion that it said will create the largest clean energy provider in the U.S.

The advancing expands Constellation’s foothold in Texas and California, as well as in the Northeast with Calpine’s natural gas and renewable energy portfolio. Constellation wants the combination to add more than $2 billion in adjusted free cash flow per year and $2 in earnings per pay out (EPS) beyond 2026.

The cash and stock transaction valued at $16.4 billion consists of $4.5 billion in cash alongside 50 million slices of Constellation stock. Constellation will also assume roughly $12.7 billion of Calpine net debt, bringing the net buy price to $26.6 billion. 

The companies said the transaction is expected to close within 12 months.

Deal Take place as AI Data Centers Drive Power Demand

The acquisition is set to expand Constellation’s capacity at a time when power require for artificial intelligence (AI) data centers in the U.S. is expected to triple by 2030, Mizuho Research analysts said last year.

The mount the barricades in demand for AI applications has driven shares of Constellation and other energy providers like Duke Energy (DUK) and NextEra Power (NEE) higher over the past year. 

Constellation shares were up over 23% at $300.50 in intraday trading Friday and sire more than doubled in value over the past 12 months.