Constellation deal approvals on track; Sierra Wireless shares fall on Wavecom bid; Yahoo shares up

By Cristal Cody

New York, Dec. 2 - Constellation Energy Group Inc. said Tuesday that state and federal approvals of its $4.7 billion merger with MidAmerican Energy Holdings Co. are on track and the company expects the deal to close on time.

Also Tuesday, Sierra Wireless Inc. offered to buy Wavecom SA for €218 million, but investors couldn't stomach the news and drove Sierra shares to a new trading low.

Yahoo Inc. shares rose 7.08% to $11.50 Tuesday on reports of a new suitor.

Meanwhile, the markets made some gains after Monday's losses on news that Ford Motor Co. may have enough cash to forgo government help and on news the Federal Reserve will extend programs to loosen the credit markets.

The Dow Jones Industrial Average rose 3.31% to 8,419.09, while the S&P 500 closed up 3.99% 848.81.

The Nasdaq Composite Index rose 3.7% to 1,449.80.

Constellation merger on track

While reports hinted Tuesday that French energy company Electricite de France SA is reviewing its options to make a new bid for Constellation Energy Group, Constellation said in a regulatory filing that the $26.50 a share merger with MidAmerican Energy is the only way to go.

Constellation shares rose 5.1% to close Tuesday at $25.15.

Constellation shareholders are scheduled to vote Dec. 23 on the $4.7 billion buyout by Warren Buffett's company.

Constellation said in the filing with the Securities and Exchange Commission that approval of the deal from the Federal Energy Regulatory Commission and the U.S. Nuclear Regulatory Commission is expected in the first quarter of 2009.

The company also said it expects approval from the State of New York in mid-February and from the Maryland Public Service Commission in the second quarter of 2009.

Constellation said in the filing that MidAmerican's offer was the only viable alternative and "other proposals did not meet immediate liquidity requirements and/or provide sufficient certainty."

Without MidAmerican's $1 billion investment in Constellation's preferred stock on Sept. 22, a "bankruptcy filing by Constellation Energy was likely imminent," according to the company.

If shareholders do not approve the merger, Constellation must pay MidAmerican $593 million in cash, including a $175 million termination fee.

Sierra shares fall on Wavecom bid

Shares of Canadian wireless modem manufacturer Sierra Wireless fell 28.61% to $5.54 Tuesday, a new trading low, on news of the merger. The stock had traded from $7 to $21.18 over the past year.

Sierra Wireless offered €8.50 a share for Wavecom's stock and €31.93 for Wavecom's convertible bonds.

Shares of Wavecom rose 15.12% to close at $10.1999. The stock has traded from $5.17 to $20.62 over the past year.

Wavecom's board of directors has approved the deal, and the company's founders have agreed to tender the 21% of outstanding shares they own in support of the transaction.

Sierra Wireless expects the transaction to close in the first quarter of 2009.

Samuel Wilson, an analyst with JMP Securities, downgraded the stock Tuesday to market perform from outperform after the announcement.

"It's a high-risk deal," he said. "It's likely to go through, but it's got integration risks, technology risks, market risks - too many risks."

The companies hope to become a market leader in wireless data.

After the deal closes, Wavecom will operate as a Sierra Wireless business unit based in Paris.

Yahooing a deal

Yahoo shares rose 7.08% to $11.50 Tuesday on reports that former AOL CEO Jonathan Miller has been trying to raise as much as $30 billion from private equity funds and sovereign wealth funds to buy all or a portion of Yahoo.

Miller is reported to be looking for a deal in the $20 to $22 a share range.

Hopes for a sale have been ongoing since Yahoo rejected Microsoft Corp.'s $47.5 billion offer in May, and the stock has tumbled since, well off its 52-week high of $30.25 a share.

Mentioned in this article:

Constellation Energy Group Inc. NYSE: CEG

Sierra Wireless Inc. Nasdaq: SWIR

Wavecom SA Nasdaq: WVCM

Yahoo Inc. Nasdaq: YHOO

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