Research Update: Constellation Energy Generation LLC Makes All-Stock Bid For Calpine Corp.; 'BBB+' Ratings Affirmed; Outlook Stable

Constellation Energy Corp. (CEG) announced it will acquire Calpine Corp. (Calpine) in a stock-for-stock exchange of about $26.6 billion in effective enterprise value, adjusted for retained cash and tax attributes. The transaction includes the assumption of about $12.7 billion of Calpine's debt. Transaction terms include total equity consideration of $16.4 billion that will be financed with $11.9 billion of CEG's wholly owned subsidiary Constellation Energy Generation LLC?s (Constellation) stock and $4.5 billion cash on the balance sheet, including about $1.8 billion of Calpine's 2025 cash flow generation. No incremental acquisition debt is contemplated. Calpine's leverage is higher than Constellation's as of September 2024, and as a result, Constellation's pro forma leverage will increase once the acquisition closes. We expect Constellation

...- Constellation Energy Corp. (CEG) announced it will acquire Calpine Corp. (Calpine) in a stock-for-stock exchange of about $26.6 billion in effective enterprise value, adjusted for retained cash and tax attributes. The transaction includes the assumption of about $12.7 billion of Calpine's debt. - Transaction terms include total equity consideration of $16.4 billion that will be financed with $11.9 billion of CEG's wholly owned subsidiary Constellation Energy Generation LLC's (Constellation) stock and $4.5 billion cash on the balance sheet, including about $1.8 billion of Calpine's 2025 cash flow generation. No incremental acquisition debt is contemplated. - Calpine's leverage is higher than Constellation's as of September 2024, and as a result, Constellation's pro forma leverage will increase once the acquisition closes. We expect Constellation will deleverage within two years of the acquisition close. - Therefore, we affirmed our '###+' corporate credit ratings on Constellation. The...

Research Update