Constellation Energy Corp

2. Mergers, Acquisitions, and Dispositions

Proposed Acquisition of Calpine Corporation

On January 10, 2025, we entered an agreement and plan of merger (Merger Agreement) with Calpine Corporation (Calpine) under which we will acquire all the outstanding equity interests of Calpine in a cash and stock transaction. Calpine owns and operates a generation fleet of natural gas, geothermal, battery storage, and solar assets with over 27 GWs of generation capacity, in addition to a competitive retail electric supplier platform serving approximately 60 TWhs of load annually. This acquisition is complementary to and aligns strategically with our existing business operations and provides both increased scale and meaningful market diversification.

The merger consideration at closing will consist of an aggregate of 50 million newly issued shares of our common stock, no par value, and $4.5 billion in cash. We will also assume approximately $12.7 billion of Calpine’s outstanding debt. We expect to fund the cash portion of the transaction through a combination of cash on hand and cash flow generated by Calpine in the period between signing and closing of the transaction (that will be assumed at closing). Per the terms of the Merger Agreement, consummation of the transaction is to occur by December 31, 2025 (which date may be automatically extended to June 1, 2026, as further provided in the Merger Agreement). The Merger Agreement also provides for certain termination rights, and under certain specified circumstances, we may be required to pay Calpine a termination fee of $500 million. Completion of the transaction is conditioned upon review of the transaction by the DOJ, the expiration or termination of the applicable waiting period under the HSR Act, and approval by the FERC, NYPSC, and PUCT, in addition to other regulatory bodies, and is subject to other customary closing conditions.

In connection with certain of the regulatory approvals required for the transaction, the companies will propose to divest certain generating assets located in PJM, the only market where there is a material overlap of generation owned by both companies.

The transaction will be accounted for as a business combination using the acquisition method of accounting and we will record the fair value of the assets acquired and liabilities assumed as of the acquisition date. To the extent that the consideration transferred is greater than the fair value of the net assets acquired, goodwill will be recorded. To the extent the fair value of the net assets acquired is greater than the consideration transferred, a bargain purchase gain will be recorded.

Through December 31, 2024, fees incurred as part of the acquisition were not material to the Consolidated Statements of Operations and Comprehensive Income.

Acquisition of Joint Ownership in South Texas Project

In November 2023, we completed the acquisition of NRG South Texas LP (renamed and converted as Constellation South Texas, LLC), which owns a 44% undivided ownership interest in the jointly-owned STP, a 2,645 MW, dual-unit nuclear plant located in Bay City, Texas. The consideration transferred was $1.66 billion. Other owners include City Public Service Board of San Antonio (CPS,40%) and the City of Austin, Texas (Austin

Note 2 — Mergers, Acquisitions, and Dispositions

Energy,16%). This acquisition is complementary to and aligned strategically with our existing clean energy business operations.

The acquisition was accounted for using the acquisition method of accounting in accordance with authoritative guidance, which requires, among other things, the assets acquired and liabilities assumed to be recognized at their respective fair value as of the acquisition date. The excess of the purchase price over fair value of our proportionate share of the assets acquired and liabilities assumed was recorded to goodwill. The goodwill recognized is primarily driven by the opportunity for continued operations through 80 years and the value of STP’s carbon-free energy that is not fully reflected by the markets. The goodwill amount has been assigned entirely to the ERCOT operating segment. See Note 12 — Intangible Assets for additional information. The total amount of goodwill is expected to be deductible for tax purposes over the tax amortization period.

The fair values of STP’s assets and liabilities were determined based on significant estimates and assumptions that are judgmental in nature, including projected future cash flows (including timing), discount rates reflecting risk inherent in the future cash flows and future power and fuel market prices.

The following table summarizes the final acquisition-date fair value of the consideration transferred and the assets and liabilities assumed for the STP acquisition:

The operating revenues and results of operations for STP have been included in the Consolidated Statements of Operations and Comprehensive Income from the date of acquisition and were not material for the year ended December 31, 2023. The pro forma effects of this acquisition are not significant to our reported results for any periods presented. Accordingly, no pro forma financial information has been presented herein.

In July 2023, NRG Energy, Inc. (NRG) accepted service of a lawsuit filed by the City of San Antonio, Texas, acting by and through CPS, in the 130th District Court of Matagorda County, Texas against NRG and certain of its subsidiaries, claiming the existence of a right of first refusal that applies to the transaction contemplated between us and NRG. In July 2023, we intervened in the lawsuit and Austin Energy also intervened in the lawsuit claiming a similar right of first refusal. Per the terms of the Equity Purchase Agreement, NRG made representations that no right of first refusal applied to the transaction contemplated between us.

In May 2024, we executed a settlement agreement with all parties (CPS/City of San Antonio, Austin, and NRG), resolving all litigation involving our purchase of the ownership interest in STP. The terms of the settlement include us selling a 2% ownership interest in STP to CPS at the same price and terms that we paid NRG for our 44%

Note 2 — Mergers, Acquisitions, and Dispositions

interest, subject to regulatory approvals from the NRC and the Public Utility Commission of Texas. Pursuant to the settlement, CPS and Austin filed Notices of Dismissal with Prejudice with the Court, which ends the litigation, and likewise withdrew their pending objections to the sale with the NRC. As a result of the settlement, we have reflected assets and liabilities associated with a 2% undivided ownership interest in STP as held for sale. The held for sale amounts are included in the Other current assets and Other current liabilities balances in the Consolidated Balance Sheets as of December 31, 2024. Closing is expected to occur within the first half of 2025. Upon closing of the sale, we and CPS will each own a 42% interest in STP, and Austin’s interest will remain at 16%. The terms of settlement are not expected to have a material impact on our consolidated financial statements.