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December 17, 2008 8:41 PM

French Giant Beats Buffett's Offer for Constellation

Posted by Zach Lowe

Addition 12/22/08 at 2:20 p.m. -- The full list of Kirkland & Ellis lawyers working on the deal was added in the sixth paragraph below based on information provided by the firm today.

The Constellation Energy saga is over, and it ended in a victory for the French energy giant EDF acquiring the struggling Baltimore energy company's nuclear power business for $4.5 billion. That's nearly the same amount Warren Buffett's MidAmerican Energy offered for all of Constellation two months ago, a deal Constellation accepted only to have that acceptance met with a half-dozen civil suits from shareholders claiming Buffett's offer was low. Other suits, including one Coughlin Stoia Geller Rudman & Robbins filed immediately after the MidAmerican offer, accused Constellation of falsely pumping up its stock price by hiding its exposure to various troubled assets. 

The EDF acquisition is a victory for a team from Skadden, Arps, Slate, Meagher & Flom, which advised the French company in its last-minute bid to trump Buffett. The firm would not release the names of the partners who advised on the deal. With finance gurus telling Bloomberg the deal is a home run for Constellation, the agreement is also a nice ending for the team from Kirkland & Ellis that has advised Constellation from the beginning. 

EDF, the world's largest nuclear power company, owns 58 reactors in France and plans to develop new-generation reactors in the U.K. and the U.S. in the next decade, the company has said.

MidAmerican does not go away empty-handed, however. As the Associated Press reminds us, it was Buffett's company that loaned Constellation $1 billion in the fall, when its stock price plummeted from north of $100 per share all the way down to $26 at the time MidAmerican made its first offer. MidAmerican gets that loan back along with $593 million in cash (including a termination fee) and 10 percent of Constellation shares, Bloomberg reports.

A team from Willkie Farr & Gallagher advised MidAmerican in the Constellation talks. Two of the lead corporate partners on that team, Peter Hanlon and Adam Turteltaub, did not immediately return calls seeking comment. 

George Stamas led the Kirkland team on the deal along with corporate partners Mark Director and Andrew Herman, tax partner Tom Evans, secured lending partner Ashley Gregory, energy partner Iskender Catto and regulatory partner Laura Fraedrich.

Brant Bishop, the Kirkland partner defending Constellation in the class action suits filed after the MidAmerican offer, was not immediately available for comment on the status of the suits in the wake of the EDF offer.

Lawyers familiar with the litigation have said the future of those cases is unclear; at least two were dismissed voluntarily after the EDF offer, court records show. Coughlin Stoia name partner Darren Robbins did not return a call seeking comment about the firm's class action case against Constellation. 

The takeover caps a big year for EDF. The French company still is seeking final antitrust approval for its $18.5 billion mega-acquisition of British Energy, a deal that brought in Clifford Chance, Slaughter & May and Herbert Smith. And EDF may not be done yet--it's Constellation deal gives it the option of buying $2 billion of the company's non-nuclear assets in the next nine months. 

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