Why Constellation Energy Stock Topped the Market on Thursday
Key Points
It's apparently holding discussions with a federal regulator about a monster deal in the works.
If successful, these talks could bring the looming purchase of Calpine to a close.
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It appears that Constellation Energy Group (NASDAQ: CEG) is closing in on a major acquisition that will significantly expand its business. A media report stated that the company is in talks with the federal government to assuage antitrust concerns over the deal. Cautiously optimistic investors bought the company's stock by 2% on Thursday after the news broke.
Discussing the deal with the DOJ?
Near market close on Wednesday, Bloomberg published an article stating that Constellation is negotiating a settlement with the Department of Justice (DOJ) to secure the agency's approval for its acquisition of peer electric company Calpine.
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Citing unidentified "people familiar with the matter," the financial news agency reported that the DOJ had been considering whether to attempt to block the sale on antitrust grounds.
Bloomberg reported that a planned November meeting between Constellation officials and antitrust head Gail Slater was canceled when the company beefed up its compromise points.
The DOJ's sign-off on the deal is the final regulatory hurdle for its completion.
Not saying much for now
When reached for comment by Bloomberg, Constellation only responded by saying that "we continue to engage constructively in the Department of Justice process."
An unnamed DOJ spokesperson was only slightly less vague, stating that "our focus remains on core pocketbook issues -- especially affordability and fair pricing in critical sectors that matter to families the most."
The Bloomberg story feels believable, particularly given how critical the potentially game-changing $16 billion-plus deal is to Constellation. The company has the significant advantage of being able to close it under the Trump administration, which is notably more favorable to large business tie-ups than some of its predecessors. Given that, I feel Constellation bulls should stay the course with this stock.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Constellation Energy. The Motley Fool has a disclosure policy.
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