By Laila Kearney and Seher Dareen
NEW YORK (Reuters) – U.S. nuclear power provider Constellation Energy (NASDAQ:CEG) on Friday agreed to buy privately-held natural gas and geothermal company Calpine Corp for $16.4 billion, marking one of the biggest acquisitions in the history of the U.S. power industry.
The cash-and-stock deal comes at a time of rising electricity demand, driven by the proliferation of energy-guzzling AI data centers and the electrification of transportation and buildings, which are expected to hit a record this year. Including debt, the transaction valued Calpine at $26.6 billion.
“Demand for our products is expected to grow by levels we haven’t seen in a lifetime,” Constellation CEO Joe Dominguez said on a call with investors following the announcement.
The agreement will turn Constellation, which is the biggest U.S. nuclear plant operator, into the largest U.S. independent power provider.
Following the announcement, shares of Constellation jumped as much as 10%, extending gains to 22% once markets opened.
The transaction, which is expected to close in the second half of 2025, could add $2 billion to Constellation’s free cash flow annually, and together the companies would have nearly 60 gigawatts (GW) of capacity from zero- and low-emission sources, including nuclear, natural gas and geothermal, Constellation said.
“Overall, the transaction creates the largest coast-to-coast power generator,” S&P’s Aneesh Prabhu said.
With the acquisition, Constellation’s employee base will grow by nearly 20% to 16,500.
The arrangement also increases the share of Constellation’s generation business in Texas and California to 23% from 11%, and to 10% from a negligible amount, respectively. The states are the two most populous, and energy-consuming, in the United States.
Shares of Constellation have jumped by more than 100% over the past year as Big Tech, many with climate-related pledges that required low-carbon power purchases, have driven up demand for nuclear power, which produces virtually no global warming emissions.
In September, Constellation announced an unprecedented power purchase agreement to resume operations at its Three Mile Island nuclear plant to supply electricity to Microsoft (NASDAQ:MSFT) data centers.
Last month, the company said it would receive a record $1 billion in nuclear power supply and energy-efficiency contracts with the U.S. government.
With a limited amount of nuclear power available, natural gas has become a more attractive option for data center demand.
Reuters was the first to report in May last year that the three investment firms that took Calpine private in 2017 – Canada Pension Plan Investment Board, Energy Capital Partners (WA:CPAP) and Access Industries – were considering a sale of Calpine.
The transaction between Constellation and Calpine is expected to close late this year.
