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And now you can pop open a nice cold National Bohemian (Natty Boh, as we call 'em at home in our distinctively hideous accent that you can catch in the movies of John Waters and Barry Levinson) and listen to a hometown rant, which, we promise, does have a point at the end. Shrewdly, MidAmerican's lawyers at Willkie Farr & Gallagher LLP tapped James J. Hanks, Jr. of Venable LLP in Baltimore as Maryland counsel. Hanks not only wrote the book on the law (literally: his "Maryland Corporation Law" goes for $284 on Amazon.com), he helped draft it. Hanks also had a hand in crafting a Maryland statute aimed at attracting REITs to the state that's been extremely successful; REITs are the only public company segment where Delaware isn't the preferred venue of incorporation. But let's come back to that poor target CEO. Who might he be in this case? None other than Mayo Shattuck III, whose mug deserves a place on dartboards across Baltimore right next to that of Robert Irsay, who moved the Colts to Indianapolis under the cover of darkness in 1984. Shattuck was A.B. "Buzzy" Krongard's second in command when Krongard sold Alex. Brown to Bankers Trust in 1997, a year before BT was caught up in the market chaos of 1998. (Remember it? Sort of a dress rehearsal for this go-round, complete with a Goldman, Sachs & Co. heavy taking control of the situation for a befuddled president). After Brown's bankers scattered in the wind, Shattuck took the reins at Constellation in 2001 and helped turn it into an energy trading operation with a utility attached. It was an odd choice, since Shattuck had no experience in either sector and was a tech investment banker rather than a trader, but perhaps Constellation's board was not deeply imaginative. Or maybe it thought the company would be the next Microsoft Corp., which Shattuck helped take public. At any rate, in 2005 Shattuck agreed to sell Constellation to FPL Group Inc., a Juno Beach, Fla.-based utility, in a combination whose purpose was mystifying. FPL's territory is not contiguous with that of Constellation, and it wasn't clear what the target gained from the deal. (Exposure to Florida natural disasters, perhaps?) Maryland politicians fulminated about the proposed sale of their beloved Baltimore Gas & Electric, and FPL walked. Now in fairness to Shattuck, utilities deals are generally hard to sell. But our man Mayo is no fool. The second time around, he chose a buyer he could bring home to the state legislature. Warren Buffett is not some utility whose assets lie in the path of hurricanes but a lovable divinity come down from a capitalist Olympus to save us all, even Lloyd Blankfein. Electricite de France SA and TPG Capital, which were also rumored to be sniffing around Constellation, wouldn't have had quite the same appeal in Annapolis, the state capital. (Lovely this time of year; check out the power boat show next month.) And as Davidoff notes, the merger agreement allows MidAmerican very generous walk rights if Constellation's finances take a turn for the worse. Looked at another way, those walk rights may be an incentive for Shattuck & Co. to get their trading operation in order before the deal closes. That may in turn suggest that MidAmerican bought Constellation for the hard assets at a steep discount than for its energy traders. At least the power's still on in Crabtown and the beer's still cold. Pass me another Natty Boh, would you? - David Marcus David Marcus is the senior legal writer for The Deal newsweekly and The Deal's Corporate Control Alert journal. CategoriesComments Deal Video
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Nice recap, you might have mentioned that GS had a hand in setting up Constellation from BG&E back in the late 90s and had a j/v with them for energy trading til 2001...