Sep 23, 2008 10:53 am US/Eastern
Not Everyone Is Happy About Constellation's Sale
BALTIMORE (WJZ) ―
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Not everyone is happy with Constellation Energy's sale to a company owned by billionaire Warren Buffet.
Not everyone is happy with Constellation Energy's sale to a company owned by billionaire Warren Buffet. One of Constellation's largest shareholders also made an offer to buy the company.
Derek Valcourt has more on what Constellation is saying about the deal.
After a rough week on Wall Street, Constellation says it took the best offer it got, and not the one that came from a French company.
Constellation Energy, the parent company to BGE which provides electricity to most of Maryland, was in a struggle for its corporate life after stocks plunged more than 75% this year.
Last week, credit problems on Wall Street limited the amount of cash available to finance Constellation Energy's trading arm and the company sought immediate help, putting itself up for sale.
Enter billionaire Warren Buffet, whose company MidAmerican Energy offered to buy Constellation for $26.50 a share.
"When companies face these types of difficulties, we can actually come in and help stabilize and realistically, there's no pressure on it going forward," said MidAmerican CEO Greg Abel.
After signing a deal on Friday, MidAmerican wired a billion dollars to Constellation Monday morning. It was immediate relief for the cash-strapped company, but now a French company, EDF, says it offered to buy Constellation. They say their price was $35 a share, and they're upset their offer wasn't accepted.
Economist Morris Segall says he thinks Warren Buffet's great reputation on Wall Street and in political circles may have helped seal the deal for MidAmerican.
"Given the circumstances that Constellation was under and given the terms of the cash availability was available to them with the Buffet deal and the fact that Buffet would allow this company to operate autonomously, I think, was the best deal this company could make for itself and I think ultimately for the state," Segall said.
The French company already filed their complaints with the US Securities and Exchange Commission. They already own 9.5% with the Constellation Energy.
Constellation and MidAmerican executives say they expect the merger of the two companies will go through within one year.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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