REFILE-DEALTALK-EDF could still trump Buffett on Constellation

(Corrects spelling of "Buffett" in headline) (For more Reuters columns on deals, please double click on [DEALTALK/])

By Benjamin Mallet

PARIS, Oct 3 (Reuters) - French power group EDF (EDF.PA) could still win Constellation Energy by drumming up support from the U.S. utility's shareholders to reject an agreed $4.7 billion bid from Warren Buffett.

Consultants and analysts say Constellation stockholders may seek to overturn the company's decision to accept the bid by Buffett's MidAmerican Energy Holdings (MDPWN.OB) and push management to go for the higher French-backed bid instead.

"EDF is still in a privileged position to challenge the adherence to shareholder interests, because ... the bottom line is that EDF's offer is higher," said Patrice Lambert de Diesbach, an analyst at French bank CM-CIC.

EDF already owns 9.5 percent of Constellation Energy Group Inc (CEG.N) via a joint venture between the two groups and sees an increased stake as its gateway into the U.S. market, where it wants to introduce new generation pressurised nuclear reactors.

The French group, the world's largest nuclear power utility, is already engaged in a $23.1 billion takeover of British Energy Group Plc BGY.L, owner of the UK's reactor network, but has said it has the financial flexibility to pursue both deals.

EDF is 85 percent owned by the French state and has a market capitalisation of $130 billion. Together with private equity partners KKR [KKR.UL] and TPG [TPG.UL] it is assessing its options on Constellation, which owns a Baltimore utility as well as a power wholesale supply and trading business.

A proposed $35-a-share or $6.24 billion offer from the French group and its backers, as notified in a filing with the U.S Securities and Exchange Commission, would top the $26.50 per share or $4.7 billion cash bid from MidAmerican by a third but was rejected by Constellation.

Constellation stock closed on Thursday at $27.23, above the MidAmerican bid and suggesting hopes of a higher bid -- but a 22 percent discount to the EDF terms, indicating EDF has a way to go yet to convince the market as a whole that it's in with a chance.

Colette Lewiner, who covers the energy, utilities and chemicals sector at consultancy firm Capgemini, said the outcome of any contest would depend on the views of Constellation shareholders. "Whatever happens, there will be a battle," Lewiner said.

Constellation said on Sept. 18 it had accepted the offer from MidAmerican, a unit of Buffett's Berkshire Hathaway (BRKa.N), which stepped in amid fears that the power company could face liquidity problems.

It defended its decision to reject the approach from EDF and partners, saying it had accepted the superior offer.

Other potential obstacles to EDF are U.S. regulations which bar majority foreign ownership of nuclear assets, but the Financial Times reported this week EDF was working on the structure of a bid vehicle to comply with these requirements. (Writing by Matt Gil; Editing by David Holmes)