Herald Tribune: MidAmerican Energy Holdings, a unit of Berkshire Hathaway, the conglomerate controlled by Warren Buffett, today announced the it reached a tentative agreement with Constellation Energy Group (CEG), for about $4.7 billion in cash or $26.50 per share. The tentative deal would provide Constellation with an infusion of $1 billion, which could help alleviate liquidity concerns. Constellation put itself up for sale earlier this week as investors’ fears about the liquidity of its trading business drove its shares down nearly 60% in three days. Mayo A. Shattuck III, chairman, president and chief executive officer for Constellation Energy said: “We strongly believe this transaction is in the best long-term interest of our investors, employees and the customers and communities we serve”. Constellation a FORTUNE 125 Baltimore-based co. with ’07 revenues of $21 billion, is the nation’s largest supplier of electricity to large commercial and industrial customers and the nation’s largest wholesale power seller. The companies expect to enter into a definitive merger agreement by close of business, Sept 19. The stock was up $0.05 after hours, at $24.25 in Thursday afternoon trading on the NYSE. Constellation shares hit a 52-week high of $107.97 in January 8, 2008. [IHT]
The Wall Street Journal: The Journal is reporting that Citigroup (C), is considering making a bid for Washington Mutual (WM). Citigroup and several other banks are currently reviewing and evaluating the books of the Seattle thrift-holding company but a sale is neither imminent nor guaranteed at this point. WaMu shares plummeted on Sept 16, to a 17-year low of $1.50 a share. Last week WaMu sacked CEO Kerry Killinger, replacing him with Alan Fishman, chairman of Meridian Capital Group. Killinger was responsible for directing WaMu’s move into subprime and other risky mortgages that has resulted in more than $6 billion in losses the past three quarters. Citigroup’s interest in WaMu, which has more than 2,200 branches across the U.S., comes just a few months after Citigroup itself was at the center of the credit crisis where it lost billion of dollars in mortgage-related write-downs. Citigroup however, has been able to raise over $40 billion in capital and has deposits to fall back on as a reliable funding source. On Thursday, WaMu made a big push to reassure customers that their deposits were safe. In an interview, at a downtown Seattle branch, the head of WaMu’s retail banking network spoke about the bank’s strong capital and liquidity position and reassured consumers that their deposits are insured for up to $100,000 by the Federal Deposit Insurance Corp. Washington Mutual shares have plunged more than 90% the past year. [WSJ]
Reuters: Treasury Secretary Paulson and Fed Chair Bernanke plan to work through the weekend, according to Reuters – on a comprehensive plan aimed at addressing ongoing liquidity contraction issues in the credit markets and banking system. They met tonight with House and Senate Republicans and Democrats to discuss a “comprehensive approach to address the illiquid assets on bank balance sheets that are at the underlying source of the current stresses in our financial institutions and markets,” Treasury spokeswoman Brookly McLaughlin said an email statement. There is a possibility that the plan may call for a government agency similar to the 1990s-era Resolution Trust Corp., (as a consequence of the S&L crisis in the 1980s, the govt. created the ‘RTC’ which was basically an asset-management co. charged with liquidating real estate assets and mortgage loans, declared insolvent by S&L.) Paulson’s and Bernanke’s meeting with Congress comes as investors remain worried about the increased level of capital tightness where many reputable firms have suffered significant losses directly linked with the toxic housing market. [Reuters]
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