Constellation Energy has entered into a definitive agreement to acquire ONEOK Energy Marketing Company (“OEMC”), a subsidiary of ONEOK, Inc. (OKE - Analyst Report) , for $22.5 million, plus working capital.
OEMC is a retail natural gas marketing company located at Tulsa, Oklahoma. Recently, Constellation Energy has reached the landmark of 1 million retail customers. The current acquisition would add approximately another 26,100 customers to its customer base. Moreover, it will expand Constellation Energy’s business and residential customer base in seven states: Kansas, Oklahoma, Missouri, Texas, Nebraska, Wyoming and Illinois.
Of late the company has made a few strategic acquisitions which helped boost its customer base and market reach. In July 2011, the company acquired MXenergy Holdings Inc. (MXenergy), which is a retail energy marketer of natural gas and electricity, for approximately $214.5 million. MXenergy Holdings Inc. serves approximately 540,000 customers in the Texas residential market. In May 2011, the company had acquired all of the outstanding stock of Star Electricity, Inc. (StarTex), which is a retail electric provider, for $163.5 million in cash. The latter acquisition added approximately 170,000 customers to Constellation’s customer base.
The company continues to enjoy a strong liquidity, helping it to indulge in strategic acquisitions. The company’s cash balance at the end of September 30, 2011, was approximately $1.17 billion.
In October this year, Constellation Energy reported third quarter 2011 results. In the reported quarter, the company's adjusted earnings per share of 68 cents came in below the Zacks Consensus Estimate of 89 cents. However, results were ahead of the year-ago earnings of 48 cents.
Constellation Energy is focused on its environment friendly commitment by providing innovative energy solutions to its customers to reduce greenhouse gas emissions and utilize sources of renewable energy. The proposed OEMC acquisition will help in expanding natural gas services for the company’s constantly growing customer base. The company expects the definite agreement to close in the first quarter of 2012.
Constellation Energy’s pending merger with Exelon Corporation (EXC - Analyst Report) is expected to be a strategic fit and earnings accretive to the combined entity in the second year itself. The company expects the transaction to be completed by early 2012.
The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.
Baltimore-based Constellation Energy Group Inc. is a diversified holding company for a group of energy businesses focused on wholesale power marketing and merchant generation. The company also provides regulated electricity and gas services in central Maryland through its subsidiary, Baltimore Gas and Electric Company (“BGE”).