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Constellation Energy is in advanced talks to acquire Calpine in a deal valued at up to $30bn, in what could be one of the largest takeovers in the power generation industry, according to people familiar with the matter.
The acquisition of Calpine would also generate a huge windfall for its private equity investors Energy Capital Partners, CPP Investments and Access Industries, who acquired it in 2017 for $17bn including debt.
One person with knowledge of the talks said a deal could be finalised within days and value Calpine at close to $30bn, including debt, making it one of the largest US power and utility deals.
The takeover talks come amid an unprecedented surge in power demand forecasts linked to the rollout of artificial intelligence data centres and reshoring of manufacturing activities, which has caused shares in Baltimore-based utility Constellation to more than double in value over the past year. Constellation shares fell as much as 10 per cent on news of the talks before recovering slightly.
The US electricity system is grappling with a historic rise in power demand after two decades of negligible growth. Consulting firm ICF expects the country’s power consumption to grow by nearly 20 per cent by 2033.
Expectations of surging power demand have been a boon for cheap natural gas-fired generation, which unlike solar and wind is available around the clock. GE Vernova, the largest gas turbine manufacturer, expects orders to have nearly doubled last year.
Calpine operates a fleet of 78 gas plants and other energy facilities across the US, which generate enough electricity to power about 27mn homes.
Constellation operates the largest fleet of conventional nuclear reactors in the US and last year announced it planned to reopen the Three Mile Island nuclear plant in Pennsylvania.
The proposed deal indicates Constellation was seeking to complement its nuclear holdings with a large-scale gas fleet “to meet the increasing demand from the growing data centre industry”, said Andrew Gillick, a managing director at energy consultancy Enverus.
Another person with direct knowledge of the matter said a deal could be announced as early as this month.
Consulting firm PwC is forecasting an increase in fossil fuel generation deals under a Republican-controlled White House and Congress, which are expected to promote development of oil and gas projects.
Constellation Energy and Calpine did not immediately respond to requests for comment. Bloomberg first reported news of the talks.
