Constellation Energy is moving forward with a significant $26.6 billion acquisition of Calpine Corp, a Houston-based provider of geothermal and natural gas power, in a deal composed of $4.5 billion in cash and 50 million shares, as well as the assumption of approximately $12.7 billion in Calpine debt. This agreement, confirmed on Reuters, is expected to propel Constellation’s stock value significantly, with an initial increase of around 8.8%.

The acquisition, expected to close in the second half of 2025, will unite two of the largest power companies in the United States, forming a powerhouse that will serve approximately 2.5 million customers across a vast geographical footprint. This includes key states like Texas, California, Delaware, New York, Pennsylvania, and Virginia, which are critical to accommodating an anticipated rise in electricity demand as noted by the U.S. Energy Information Administration.

Once completed, the combined entity will boast nearly 60 gigawatts of capacity from zero- and low-emission energy sources such as nuclear, natural gas, geothermal, hydro, wind, solar, and battery storage. “By combining Constellation’s unmatched expertise in zero-emission nuclear energy with Calpine’s industry-leading low-carbon generation fleets, we will be able to offer a comprehensive array of energy products and services,” said Constellation CEO Joe Dominguez in a prepared statement.

Calpine’s independent status as a power producer allows the firm to aggressively participate in the energy market, and this merger will ultimately create over $2 billion in annual free cash flow. Constellation is looking strategically to enhance its operational scale and reinvest in high-demand energy solutions in a rapidly evolving sector. The transaction is subject to regulatory approval from various authorities including the Federal Energy Regulatory Commission and the Public Utility Commission of Texas, as mentioned by AP News.