Constellation Energy executives hope they’ll get an early Christmas present with shareholder approval of the company’s $4.7 billion merger in a Dec. 23 vote announced Tuesday.
Several shareholders initially filed suit against what they saw as a lowball offer from MidAmerican Energy Holdings Co. accepted by company management.
But analysts said in the two months since Constellation faced either a deal or bankruptcy, many investors have come to support the offer and understand the unlikely chance of finding another bidder.
“I think the gravity of the situation has had sufficient time to sink in,” said Paul Justice, an analyst covering Constellation for Chicago-based Morningstar. “I think more evidence has surfaced … that the whole environment for corporate lending is pretty tight right now.”
In a filing with the Securities and Exchange Commission on Tuesday, Constellation set a special meeting for 8 a.m. on Dec. 23 at company headquarters in downtown Baltimore.
The filing also included new details of internal discussions over three days in September as the company faced the prospect of bankruptcy.
Constellation was forced to accept a $26.50-a-share offer from MidAmerican, controlled by super-investor Warren Buffett’s Berkshire Hathaway, in mid-September after its stock price tumbled on concerns over the liquidity of its trading operation.
But several shareholders filed suit when Constellation’s largest investor, French energy giant Electricite de France, said it had been prepared to offer $35 a share for the company. EDF said a short time later that it would not renew its bid for the Baltimore-based energy company.
On Sept. 17, the day before it announced the merger agreement, the company valued itself at between $21.82 and $27.39 a share, with a net value of between $4 billion and $5 billion, according to Tuesday’s regulatory filing.
“The continued deterioration in global credit and commodity markets leads us to conclude that combining with a well-capitalized strategic partner like MidAmerican is the best outcome for Constellation Energy and its shareholders,” Constellation President, Chairman and Chief Executive Officer Mayo Shattuck said in a statement Tuesday.
In addition to the shareholder vote, the deal will require approval from several U.S. and local regulators, including the Federal Energy Regulatory Commission and the Maryland Public Service Commission. The PSC has scheduled hearings on the merger for February and expects to make a decision by mid-April.
