U.S. Energy Corp. giant Constellation Energy (CEG.US) has agreed to acquire Calpine for 16.4 billion dollars.

Constellation Energy (CEG.US) has agreed to acquire the minority stake in Calpine Corp. for $16.4 billion to add dozens of power assets across the United States. The two companies said in a statement on Friday that Constellation will pay in cash and stock. Constellation will also assume Calpine's net debt of around $12.7 billion. Constellation's stock rose over 13% in pre-market trading on Friday. This acquisition will be one of the largest in the U.S. power industry, bringing significant returns to Calpine's shareholders Energy Capital Partners, Canada Pension Plan Investments, and Access Industries, who took the company private in 2018 for $5.5 billion. With the increasing demand for energy in the U.S., Constellation is seeking to expand. Over the next five years, electricity demand is expected to grow by nearly 16%, driven by data centers running artificial intelligence operations, new factories, and electrification of everything from cars to home heating. All of this has led to a rise in the market value of power suppliers, with Constellation's stock price rising over 90% last year. When Constellation spun off from utility owner Exelon Corporation (EXC.US) in 2022, CEO Joseph Dominguez expressed interest in growing the company through acquisitions. The following year, Constellation acquired a 44% stake in a nuclear power plant in Texas from NRG Energy (NRG.US) for $1.75 billion. However, compared to the Calpine acquisition, both in terms of scale and value, this deal pales in comparison. Constellation operates natural gas and hydroelectric facilities, as well as the largest nuclear fleet in the U.S., with a total capacity of 32.4GW. One GW is equivalent to a traditional nuclear power plant, enough to power over 850,000 average American households. Through the Calpine deal, it will add 78 power plants in 22 states, with a capacity of 27GW. According to Friday's statement, the price Constellation is paying is 7.9 times the expected earnings in 2026.