(Reuters) - Constellation Energy ( CEG ) said on Friday it would buy privately held Calpine Corp, a geothermal and natgas energy company, in a cash-and-stock deal valued at $26.6 billion including debt, sending Constellation's shares up 3.3%.

The deal comes as electricity demand is expected to rise to record highs this year, according to data from the U.S. Energy Information Administration.

Calpine's takeover ranks as the biggest in the U.S. power industry since TXU Corp's $45 billion leveraged buyout in 2007.

Together, Constellation and Calpine would have nearly 60 gigawatts (GW) of capacity from zero- and low-emission sources, including nuclear, natural gas and geothermal, Constellation said.

Reuters was the first to report in May last year that the three investment firms that took Calpine private in 2017 - Canadian Pension Plan Investment, Energy Capital Partners and Access Industries - were looking at options for Calpine including a sale.