Constellation Energy’s Calpine deal could be ‘meaningfully accretive’, say UBS

UBS keeps a Buy rating and $289 price target on Constellation Energy (CEG) after the stock’s 5% decline today on Bloomberg report that the company is near a deal to acquire Calpine for $30B. The potential strategic rationale is expanding the composition of the generation fleet to include 27 GWs of predominantly natural gas generation to go along with Constellation’s 22 GWs of baseload nuclear, 8.4 GWs of gas and 2.6 GWs of renewables, the analyst tells investors in a research note. The deal potentially could be accretive in a meaningful way for Constellation Energy as the company would then have a full dispatch stack of assets, carbon free baseload nuclear, mid-merit and peaking, which would position it well for a variety of market conditions and have more volumetric upside as power demand grows, the firm adds.