Constellation Isn't Breaking Up With Buffett Yet .. But Plans To Talk With Rival Suitor

Gail Burton

The Constellation Energy building is photographed Monday, Dec. 19, 2005, in Baltimore. Energy supplier FPL Group Inc. is buying rival power-plant operator Constellation Energy Group Inc. for more than $11 billion in stock in a deal announced Monday that would create one of the nation's biggest electricity conglomerates. (AP Photo/Gail Burton)

Constellation Energy is not calling off its planned marriage to Warren Buffett's MidAmerican Energy Holdings ... yet. But it will check out the competition before gathering shareholders to ask for their blessing.

Today Constellation put out a news release revealing that the company's board has given the go-ahead for "immediate discussions and exchange of information" with Électricité de France about its latest offer.

That bid challenges MidAmerican's hastily-hatched deal to buy the entire company for $4.7 billion.

EDF is offering to pay $200 million less for just half of Constellation's nuclear business. The French company figures its offer values Constellation at around $52 a share, almost double Buffett's 'bargain' price.

That's tough to ignore, so Constellation plans to talk to EDF about the numbers. Remember, the board has a responsibility to get the 'best' deal for shareholders. (Defining what's 'best' can be the tricky part.)

In the meantime, Constellation's board has not "withdrawn, modified or qualified its recommendation" that shareholders approve the MidAmerican deal when they meet on December 23. That's just two weeks away.

It's not clear that shareholders would follow that advice in any case. Several lawsuits have been filed challenging the Buffett deal, arguing the price is too low.

But, as we pointed out in the WBW post Why Fight When You Can Take the Money and Run?, even if Constellation does eventually break it off with MidAmerican, Buffett gets a nice consolation prize. It features 10 percent of MidAmerican's common stock, almost $600 million in cash, and a 14 percent return on the $1 billion infusion that's MidAmerican has already pumped into Constellation.

Current Berkshire stock prices:

Class A:

Class B:

Questions? Comments? Email me at [e-mail]