September 23, 2008 4:44 PM

Lawsuits Piling up Over Constellation-MidAmerican Deal

Posted by Zach Lowe

Some billion-dollar deals just aren't popular, and it appears the $4.7 billion sale of Baltimore's Constellation Energy Group to MidAmerican Energy Holdings Company falls into that category.

According to the Associated Press and the Maryland Daily Record, at least five shareholder suits have already been filed trying to block the sale to MidAmerican, a subsidiary of Warren Buffett's Berkshire Hathaway.

The suits say the deal is a low-ball offer that rips off existing shareholders, the publications report. The firms leading the charge at Baltimore City Circuit Court include Finkelstein Thompson in Washington, D.C. and Baltimore's Tydings & Rosenberg, the Daily Record says.

The suits can only stop the deal if they can prove the company breached its fiduciary duty to shareholders, experts told the Daily Record.

That's where Coughlin Stoia Geller Rudman & Robbins comes in. The firm has filed its own suit claiming Constellation executives hid the company's financial problems in order to boost its stock price, which reached a high of $97.34 a share in the early part of 2008. The price plunged below $50 per share when Lehman Brothers filed for bankruptcy and the extent of Constellation's exposure to Lehman's credit problems became clear, the suit says. It now sits at about $26 per share.

Partner Darren Robbins is representing the shareholders, the firm says.

The MidAmerican deal values Constellation shares at $26.50 a piece, and the shareholders claim the company could have done better had it negotiated with the French energy giant EDF, which owns nearly 10 percent of Constellation's stock.

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