Constellation Energy and Calpine unveil plans for $27bn merger

American power generation giant Constellation Energy has announced plans to merge with privately owned peer Calpine in a deal worth nearly $27bn.

The tie-up will create the country’s “leading producer of clean and reliable energy to meet growing demand for customers and communities”, the companies said on Friday.

Futures in Nasdaq-listed Constellation were up 14% ahead of the opening bell on Friday at $278.87.

Under the terms of the transaction, Constellation will buy Calpine in a cash-and-stock deal valued at an equity purchase price of $16.4bn, plus the assumption of $12.7bn of Calpine debt.

The net purchase price of $26.6bn. which takes in account cash expected to be generated by Calpine before the completion as well as tax attributes, values the company at 7.9 times EBITDA.

“This acquisition will help us better serve our customers across America, from families to businesses and utilities,” said Joe Dominguez, Constellation’s president and chief executive.

“Both companies have been at the forefront of America’s transition to cleaner, more reliable and secure energy, and those shared values will guide us as we pursue investments in new and existing clean technologies to meet rising demand.”