Major deal: Constellation to buy Calpine for nearly $27 billion

US-based power generation company Constellation Energy is expected to buy rival Calpine Corporation, a major independent power producer, in a deal valued at nearly $27 billion.

The deal will create the largest clean energy supplier in the U.S, the companies said, amid rising energy needs fueled by the artificial intelligence boom.

The transaction comprises $16.4 billion in cash and stock, with Constellation issuing 50 million shares and providing $4.5 billion in cash, additionally, Constellation will assume $12.7 billion of Calpine’s debt.

Calpine, a leader in low-emission natural gas production in the United States, owns 79 facilities, including the largest US geothermal energy site in northern California. The deal comes as companies seek energy sources to fuel their rapidly expanding AI operations while seeking to uphold low-carbon emission commitments.

Stock exchanges hail Constellation

“By combining Constellation’s unmatched expertise in zero-emission nuclear energy with Calpine’s industry-leading, best-in-class, low-carbon natural gas and geothermal generation fleets, we will be able to offer the broadest array of energy products and services available in the industry,” Constellation CEO Joe Dominguez said in the statement.

Constellation’s stock surged over 12% in premarket trading on Friday. Over the past year, its shares have more than doubled, driven by increasing expectations for growth in U.S. power demand.

The deal is expected to generate over $2 billion in annual free cash flow, providing strategic capital and scale for reinvestment in the business, according to the companies.

The companies announced that they anticipate finalizing the transaction within a year, pending regulatory approvals.