updated 12/3/2008 10:17:47 AM ET 2008-12-03T15:17:47

France's state-controlled power company challenged a proposed takeover by Warren Buffett of Constellation Energy Wednesday, putting up almost as much money for half its nuclear business as the legendary investor had offered for the entire company.

Constellation shareholders have already filed at least half a dozen lawsuits, saying the $4.7 billion bid from Buffett's MidAmerican Energy Holdings Co. was too low. MidAmerican swept in to acquire the company three months ago as Constellation wrestled with frozen credit markets and tried to stay afloat.

Electricite de France SA, Constellation's biggest shareholder, offered $4.5 billion for just half of the U.S. wholesale power generator's nuclear business early Wednesday. EDF withdrew its own bid of $35 per share in October for all of Constellation, and called MidAmerican's offer inadequate.

EDF, which owns 9.5 percent of Constellation, said the offer values the company at around $52 per share and that the price represents a 96 percent premium to the rival offer for all of Constellation. MidAmerican's offer values the company at around $26.50 per share.

"EDF expects it can receive the necessary regulatory approvals for the acquisition of its interest in the nuclear generation and operation business and close the transaction within six to nine months, upon Constellation's termination of its proposed transaction with MidAmerican Energy," the company said Wednesday.

Constellation said it was reviewing the offer.

If Constellation ditches Buffett's offer, there is a $175 million break-up fee plus interest.

Early calls to MidAmerican were not immediately returned Wednesday.

If it succeeds, EDF may avoid the hurdles over foreign ownership of U.S. nuclear facilities, and would further the companies goal of expanding outside of France.

In September, EDF said it would buy British Energy Group for $18.5 billion.

Last chance
The bid for Constellation is EDF's "last chance to change minds, not of Constellation's management, but of its investors," said industry analyst Peter Wirtz of WestLB Research based in Dusseldorf.

He said EDF stands little chance of succeeding despite a "clearly very attractive offer" because at a time of global economic and financial upheaval, investors are more likely to be lured by MidAmerican's complete takeover bid than by the more complex offer of EDF.

Yet shares in EDF sank following the announcement amid investor fears that a bruising takeover battle may be brewing.

EDF's offer includes a $1 billion "upfront" cash infusion in Constellation, which would counter one of the strongest motivations for shareholders who were mulling the MidAmerican bid.

MidAmerican had also offered $1 billion in cash up front and on Tuesday, Constellation said it likely would have filed for bankruptcy protection without it.

Constellation's nuclear business includes three nuclear power stations with five reactors located in Maryland and New York. Nuclear power accounts for 61 percent of Constellation's total electricity generating capacity of 8,700 megawatts.

Constellation's non-nuclear assets include coal- and natural gas-fired electric plants, as well as oil and renewable energies such as solar, geothermal and hydro power.

Constellation Energy Group Inc. warned in a U.S. regulatory filing Tuesday that unstable market conditions make the deal with MidAmerican critical.

The EDF offer includes an option to sell up to $2 billion of "non-nuclear generation assets" to the French company in a deal that could close in six to nine months.

"Constellation Energy's Board of Directors has not withdrawn, modified or qualified its recommendation that shareholders of Constellation Energy vote in favor of the merger with MidAmerican," the company said Wednesday.

Constellation shareholders are scheduled to vote on the proposed MidAmerican deal on Dec. 23.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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