Warren Buffett has capitalised on the prevailing low valuations caused by the negative market sentiments by acquiring Constellation Energy Group, a Fortune 125 company and the largest US power marketer, whose stock had taken a beating due to acute shortage of liquidity in its commodities trading business, for about $4.7 billion in cash.

MidAmerican Energy, which is controlled by Warren Buffett's Berkshire-Hathaway, has made a tentative agreement to acquire Constellation for $26.50 a share, which is approximately 60 per cent lower than its market value a week ago.

EDF, the French power group with a minority stake in Constellation, had injected $500 million as capital investment and doubled its stake to 9.51 per cent last week in a bid to acquire the US power firm.

Buffett, who has a penchant for investing in the US power sector, was seen as a better investor than EDF by the MidAmerican board.

In 2000, he paid $1.7 billion to acquire an 85-per cent stake in MidAmerican and later acquired the rest. The company operates regulated utilities in 10 states in the US and plants in Australia and the Philippines. It is also a pipeline operator of Northern Natural Gas.The acquisition will nble it to acquire Constellation's  nuclear plants and other power stations in the East and its Baltimore Gas & Electric He had earlier bought shares of NRG Energy and loaned it to Williams, Reliant and TXU at large interest rates.

The companies expect to enter into a definitive merger agreement by close of business, September 19. Upon signing a definitive merger agreement, Constellation Energy will issue $1 billion of preferred equity yielding 8 per cent to MidAmerican.

The tentative agreement, which has been unanimously approved by both company boards of directors, is subject to further due diligence, as well as shareholder and customary federal, state and local regulatory approvals. The transaction is expected to close within nine months.

''We strongly believe this transaction is in the best long-term interest of our investors, employees and the customers and communities we serve,'' Mayo A. Shattuck III, chairman, president and chief executive officer for Constellation Energy said in a statement.

''The financial services sector and energy commodity markets have witnessed unprecedented volatility. Backed by the significant industry expertise and financial stability of MidAmerican and Berkshire Hathaway, Constellation Energy will build on its reputation as a first-choice energy solution provider for our many customers,'' Shattuck added.

Constellation Energy, with 2007 revenues of $21 billion, is the US largest competitive supplier of electricity to large commercial and industrial customers and the nation's largest wholesale power seller.

Constellation Energy also manages fuels and energy services on behalf of energy intensive industries and utilities and owns a diversified fleet of 83 generating units located throughout the United States, totaling approximately 9,000 megawatts of generating capacity. It delivers electricity and natural gas through the Baltimore Gas and Electric Company (BGE), its regulated utility in Central Maryland.

MidAmerican Energy Holdings Company, based in Des Moines, Iowa, is a global provider of energy services. Through its energy-related business platforms, MidAmerican provides electric and natural gas service to more than 6.9 million customers worldwide.

These business platforms are Pacific Power, Rocky Mountain Power and PacifiCorp Energy, which comprise PacifiCorp; MidAmerican Energy Company; CE Electric UK; Northern Natural Gas Company; Kern River Gas Transmission Company; and CalEnergy.