Did Warren Buffett just get out-maneuvered? Electricite de France has just snatched Constellation Energy away from Buffett’s MidAmerican Energy.
The fight over the fate of Constellation Energy Group ended yesterday with a big French utility agreeing to pay $4.5 billion for a half interest in the company’s nuclear power plants and a Midwest utility controlled by Warren Buffett getting $593 million in cash plus a 10 percent stake in Constellation to drop its takeover bid.
The agreement ends a three-month saga during which MidAmerican Energy Holdings rushed in with a $4.7 billion, $26.50-a-share takeover bid for the cash-starved Constellation, only to run into a higher, $35-a-share competing offer led by Electricite de France, the state-owned French utility.
The final accord gives EDF a greater platform to press for new nuclear power plants in the United States. The French firm plans to make Constellation’s proposal for a new unit at the existing Calvert Cliffs nuclear facility a showcase for federal lawmakers.
This is kind of shocking. Frankly, I was a bit shocked when MidAmerican (or, more properly, Buffett) made the play for Constellation. But to see EDF take it away is even more shocking. There will be quite a lot of water cooler talk about this one in the industry.
I was a supporter of nuclear power long before I entered the field (unintentionally). So I welcome the push for more plants, regardless of which corporation is pushing them. EDF has a very good track record at managing their facilities, so it will be interesting to see how this all plays out.
(Sorry if this post is a little “inside baseball”. But it is my field, after all.)
Could be that Buffet was out-maneuvered – or it could be that EDF overpaid for Constellation, and Buffet was unwilling to bid up the price just to “win”. We may never know the answer to that one.
Mid American doubled their money, but Buffet was only short term trading when he got into Constellation. He really didn’t have any long term plan.