Constellation agrees to buy Shell’s Rhode Island power plant for $715 million

Constellation ($CEG) agreed to acquire the Rhode Island State Energy Center from Shell ($SHEL) for $715 million. The 609-megawatt combined-cycle natural-gas plant is located in Johnston, Rhode Island. Constellation estimates that first-year tax benefits will reduce the transaction’s effective net cost to approximately $580 million, distinguishing the economic cost from the headline purchase price.

The buyer expects the acquisition to increase operating earnings per share and generate an unlevered return above 10%. It also said the deal would not change its existing $5 billion share-repurchase authorization. Those figures are management expectations rather than realized results. Regulatory approvals and customary closing conditions still apply, so the plant has not yet been transferred under this agreement. For Shell, the announcement concerns the sale of a specific generation asset.

Sources:

• Constellation — acquisition agreement, Business Wire