DealZone

EDF bid could help other power deals

December 3, 2008

EDF’s unsolicited bid for a 50 percent share of Constellation Energy’s nuclear business could have a wider effect than the French company intended, according to Wachovia analyst Samuel Brothwell.

Brothwell said the bid could also effect other power companies that could be up for sale, in particular NRG Energy and Reliant Energy. The bid “offers another data point highlighting the extremely low levels at which the market is currently valuing their plants,” he wrote in a research note on Wednesday.

Brothwell estimated that NRG’s power assets were being valued at about $550 per kilowatt (kW) and Reliant’s were trading at about $260 per kW.  That compares with the $862 per kilowatt EDF used to value Constellations non-nuclear assets.

Moreover, Brothwell speculated that if MidAmerican fails in its bid to buy Constellation, it could use its extra cash to go after another power company.

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