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.

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.