Constellation Buys Calpine and Bets That Data Centers Will Need Gas Too
The company that has become the face of nuclear power for data centers has decided it also wants to own the largest gas fleet in the country. On January 10 Constellation Energy agreed to acquire Calpine in a cash and stock deal with an equity purchase price of about $16.4 billion, made up of 50 million Constellation shares and $4.5 billion in cash, plus the assumption of roughly $12.7 billion of Calpine net debt. After accounting for cash Calpine is expected to generate before closing and the value of its tax attributes, Constellation put the net purchase price at $26.6 billion, or 7.9 times 2026 enterprise value to EBITDA.
Constellation said the combined company would have a significantly expanded presence in Texas, which it called the fastest growing market for power demand, and the deal brings together the two assets that large new customers most want: around-the-clock nuclear output and dispatchable gas. Calpine describes itself as the largest U.S. generator of electricity from natural gas and geothermal resources. Its 79 operating facilities total more than 27,000 MW, and through wholesale and retail businesses it serves customers in 22 states and Canada.
Constellation, before the deal, reported 55 GW of capacity from nuclear, gas, oil, geothermal, hydro, wind and solar facilities, and said it supplies about 10% of the nation's clean energy. Calpine's owners, led by Energy Capital Partners, will take Constellation stock and have agreed to an 18-month lock-up, subject to a schedule for potential sales. Constellation told investors the deal would add more than 20% to adjusted operating earnings per share in 2026 and at least $2 per share in later years, and more than $2 billion of free cash flow annually.
Combining the largest nuclear fleet with the largest gas fleet raises market power issues. The deal sets a price on firm, flexible generation at the start of the data center boom. For data center developers, the message is that the power suppliers they depend on are consolidating, and that the largest of them intends to sell both carbon-free and gas-backed power.