$Constellation Energy (CEG.US)$ shares are trading higher on Friday after the company announced an agreement to acquire electricity generation company Calpine Corp. in a cash and stock deal valued at $16.4 billion.

The transaction also entails the assumption of Calpine's debt, bringing the total net purchase price to approximately $26.6 billion.

The agreement will combine Constellation's expertise in nuclear energy with Calpine's fleet of low-emission natural gas and geothermal plants.

Calpine's fleet of 79 energy facilities in operation represents over 27,000 megawatts of generation capacity.

The companies expect the acquisition to close within twelve months of signing, pending regulatory approvals.

At close, it's projected to be accretive to Constellation's earnings, with a 20% increase in operating EPS by 2026.

The acquisition is also expected to generate more than $2 billion in annual free cash flow.

Constellation, under the helm of CEO Joe Dominguez, claims that nearly 90% of its annual energy output comes from emissions-free sources.

The Calpine purchase brings a major gas-fired asset under Constellation's umbrella, perhaps forcing a rethinking of its green-energy branding.

Constellation expects to fund the cash portion of the transaction through a combination of cash on hand.

The company held $1.79 billion in cash and equivalents as of Sept. 30, 2024.