* EDF to buy Constellation’s share in UniStar for $140 mln
* EDF to transfer 3.5 mln shares back to Constellation
* Constellation will not exercise option
* EDF shares up 1.9 pct in Paris
(Adds analyst comment, EDF shares, details)
NEW YORK/PARIS, Oct 27 (Reuters) - EDF EDF.PA and U.S. partner Constellation Energy Group Inc CEG.N have settled a dispute over their nuclear project that could have cost the French power company up to $2 billion.
Under the agreement, EDF will buy Constellation’s 50 percent stake in their UniStar partnership for $140 million and will also transfer the 3.5 million shares it owns in Constellation back to the company and give up its board seat, EDF said.
In return, Constellation agreed not to exercise an option to sell EDF up to $2 billion of non-nuclear assets. [ID:nN16244540]
The value of the assets was fixed in 2008 under a deal Constellation struck with EDF when the U.S company was facing liquidity issues, but the market value of gas and coal-fired power assets has declined markedly since 2008. [ID:nN18268248]
“The deal appears to be balanced. It will prevent EDF from a write-off in the U.S. that could have amounted to some 600 million euros ($837.2 million) if Constellation had exercised the option”, a Paris-based analyst said.
EDF shares rose more than 2 percent on Wednesday.
Under the previous deal, EDF had agreed to buy a 49.9 percent stake in Constellation’s operating nuclear business and gave Constellation the option, which was set to expire at the end of the year.
EDF had been threatening legal action if Constellation decided to exercise the option.
EDF’s previous representative on the board of Constellation, Daniel Camus, who was involved in the original deal, stepped down on Oct. 21.
The two companies had also disagreed over Constellation’s decision earlier this month to unilaterally pull out of the federal loan guarantee process for the companies to build a new nuclear reactor at Constellation’s Calvert Cliffs plant in Maryland.
Under the new agreement, EDF will be the sole owner of UniStar, which owns the Calvert Cliffs sites. Constellation will also transfer to UniStar potential new nuclear sites at Nine Mile Point and R.E. Ginna in New York State. ($1=.7166 Euro) (Reporting by Helen Kearney; Additional reporting by Michael Erman, Matthias Blamont and Benjamin Mallet; Editing by Jon Loades-Carter)