Egan-Jones rejects MidAmerican bid; Telecom deals go to vote soon; Foundry holders vote Wednesday

By Cristal Cody

New York, Dec. 16 - Constellation Energy Group Inc. could make a decision by Wednesday on whether to accept the offer from Electricite de France SA over a full acquisition by MidAmerican Energy Holdings Co.

Meanwhile Tuesday, Egan-Jones Proxy Services said it recommends Constellation shareholders vote against the MidAmerican deal.

In other deals, Centennial Communications Corp. told Prospect News on Tuesday that the company expects to set a date in early January for shareholders to vote on the acquisition by AT&T.

CenturyTel Inc. and Embarq Corp. also said Tuesday that plans are in the works to set shareholder meetings to approve their merger.

In other news, Foundry Networks Inc. hopes stockholders approve the acquisition on Wednesday by Brocade Communications Systems Inc. in light of Tuesday's announcement of a special dividend.

Meanwhile on Wall Street, investors sent stocks up after the Federal Reserve made a surprise move to slash interest rates again with a range of zero to 0.25% instead of a fixed point.

The Dow Jones Industrial Average rose 359.61, or 4.2%, to 8,924.14.

Broader stock markets also rose on the Fed's announcement.

The Standard & Poor's 500 index rose 44.61, or 5.14%, to 913.18, and the Nasdaq Composite index rose 81.55, or 5.41%, to close at 1,589.89.

Constellation to pick suitor

Constellation Energy Group's board is said to be making a decision by Wednesday on whether to accept the offer from Electricite de France over the prospect of a full acquisition by MidAmerican Energy Holdings.

Constellation representatives did not return a phone call for additional information.

Egan-Jones Proxy Services said Tuesday it recommends shareholders vote against the MidAmerican deal.

"Egan-Jones believes that the EDF offer is significantly superior to that agreed upon with MidAmerican Energy Holdings Co. and would provide the company's shareholders with greater value, although it is subject to some uncertainty regarding U.S. regulatory approval," the firm said in its proxy report.

Constellation shareholders are expected to vote on the MidAmerican Energy merger on Dec. 23.

Constellation said last week it would consider the French utility's offer of $4.5 billion for half of Constellation's nuclear assets. The deal values Constellation's stock at $53 a share, according to the company.

MidAmerican, a unit of Warren Buffet's Berkshire Hathaway Inc., agreed in September to pay $4.7 billion, or $26.50 a share, for the whole company.

MidAmerican said it has no plans to raise its bid.

If Constellation backs out of the MidAmerican deal, it would have to pay MidAmerican about $593 million in cash, provide about 9.9% of its outstanding stock and sell $1 billion in 14% senior notes due in December 2009.

Constellation shares closed Tuesday at $28.74, up $1.44, or 5.27%.

Centennial vote in January

Centennial Communications expects to set the date for shareholders to vote on the $944 million, or $8.50 a share, cash buyout by AT&T in early January, "if everything goes as planned," spokesman Steve Kunszabo said Tuesday.

The preliminary proxy must be reviewed by the Securities and Exchange Commission first.

"The SEC's review period is typically 10 days," Kunszabo said. "Once the SEC reviews it, if everything comes out OK, then we'll issue the definitive proxy. We are unable to set the stockholders date until that becomes definitive."

The companies also filed applications to clear the deal with the U.S. Justice Department and the Federal Communications Commission on Nov. 21.

Centennial shares rose 9 cents, or 1.13%, to close Tuesday at $8.06, up from the $3.47 closing stock price the day before the offer was made.

AT&T stock rose 5 cents, or 0.21%, to close at $23.96 in trading.

CenturyTel, Embarq work on dates

Moving to other telecommunications deals, CenturyTel and Embarq also expect to set dates soon for shareholders to vote, the companies told Prospect News on Tuesday.

CenturyTel of Monroe, La., offered to buy Embarq on Oct. 27 for stock initially valued at $5.8 billion.

Embarq shareholders will get 1.37 shares of CenturyTel for each share of Embarq.

The deal received clearance from the Justice Department in November. The merger still requires approval from more than a dozen state public service and utilities commissions.

"No date has been set yet on the shareholder vote. We will be working on that in the next couple of weeks," said CenturyTel spokesman Annmarie Sartor.

The deal is expected to close in the second quarter of 2009.

Embarq shares jumped $2.71, or 9.5%, to close Tuesday at $31.25 in trading.

CenturyTel shares also advanced $1.68, or 7.04%, to end the day at $25.54.

Foundry vote Wednesday

Foundry Networks said Tuesday it sold its portfolio of auction-rate securities for net proceeds of $38.8 million.

The company said it will pay shareholders a special dividend of 24.9 cents a share if shareholders vote Wednesday to approve the acquisition by Brocade Communications Systems.

If the merger is not approved, Foundry will not pay the dividend.

Brocade has offered to pay $2.6 billion, or $16.50 a share, in cash for the company.

A market analyst said Tuesday said there is always a risk shareholders won't approve the merger, but "we think there is a better chance than not it will go through."

If approved, the deal is expected to close by Dec. 31.

Foundry shares rose 56 cents, or 3.61%, to close Tuesday at $16.07.

Brocade shares rose 35 cents, or 11.44%, to $3.41.

Mentioned in this article:

AT&T NYSE: ATT

Brocade Communications Systems Inc. Nasdaq: BRCD

Centennial Communications Corp. Nasdaq: CYCL

CenturyTel Inc. NYSE: CTL

Constellation Energy Group Inc. NYSE: CEG

Embarq Corp. NYSE: EQ

Foundry Networks Inc. Nasdaq: FDRY

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