Duke Energy, Progress Energy to merge in $26B deal

Posted January 9, 2011
Updated January 10, 2011

— Duke Energy (NYSE: DUK) and Progress Energy (NYSE: PGN) will merge in a deal valued at $26 billion, the companies announced Monday morning.

The combined company, which will be called Duke Energy, will be based in Charlotte but will "maintain substantial operations in Raleigh," the companies said in a statement.

Regulators must still approve the transaction. If approved, it would result in the formation of the largest utility in the U.S. with about 7 million customers.

Bill Johnson, chairman and chief executive officer of Progress Energy, will lead the combined company, the companies said. James Rogers, chairman and CEO of Duke, will be the executive chairman.

“This combination of two outstanding companies is a natural fit,” Johnson said in the statement. “It makes clear strategic sense and creates exceptional value for our shareholders.

"Together, we can leverage our best practices to achieve even higher levels of safety, operational excellence and customer satisfaction and save money for customers by combining our fuel purchasing power and the dispatch of our generating plants," he said.

Raleigh Mayor Charles Meeker lamented the loss of Progress Energy's headquarters – the company is the only Fortune 500 firm based in Raleigh – and the expected outflow of executives.

"It's never a good day when you have a major corporate headquarters leave," Meeker said.

Duke Energy sign Utilities say customers will benefit from merger

Johnson said the companies would stress attrition and retirements first to reduce its payroll, but the overall job impact won't be known for many months.

"There would be some overlap of positions, and we would expect some positions to be eliminated, but again, that won't start until the merger is completed in about a year," Progress Energy spokesman Mike Hughes said.

The deal for the naming rights to the Progress Energy Center for the Performing Arts remains intact, and Meeker said the company's move could open up chunks of office space in downtown Raleigh for other companies.

"For the most part, it's going to be a modest impact," said Harvey Schmitt, president and chief executive of the Greater Raleigh Chamber of Commerce. "We'll be working hard to try to get the best deal for Raleigh and the region."

"I know what's gold for some is not for others immediately. I think, at the end of the day, it will benefit both communities," Gov. Beverly Perdue said.

Combined, Duke Energy and Progress Energy would have customers across North and South Carolina, Florida, Indiana, Kentucky and Ohio.

“Our industry is entering a building phase, where we must invest in an array of new technologies to reduce our environmental footprints and become more efficient,” Rogers said in the statement. “By merging our companies, we can do that more economically for our customers, improve shareholder value and continue to grow.

“Combining Duke Energy and Progress Energy creates a utility with greater financial strength and enhanced ability to meet our challenges head-on,” Rogers added.

North Carolina State University economist Mike Walden said the larger utility would be better positioned to meet the growing need for electricity across the Southeast by building more efficient and environmentally friendly power plants.

"I think that will all be easier with a bigger company, and I think the customer will benefit from that," Walden said.

"Long term, we would expect for the rate prognosis to be better as a larger company," Hughes said.

Duke Energy will pay Progress Energy shareholders 2.6125 shares of Duke stock for each share of Progress Energy, with a value of $46.48 per share. That price would value Progress Energy at $13.7 billion.

Duke Energy also will assume $12.2 billion in Progress Energy debt.

After the merger is complete, Duke Energy shareholders would own 63 percent of the combined company. The new Duke Energy would have an 18-member board of directors – 11 designated by Duke Energy and seven by Progress Energy.


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  • progressleaks Jan 11, 2011

    Companies expand and contract, merge and fold under. I’m not bashing the merger or the inevitable layoffs that will follow. However, when you are a CEO that makes $3347.52 an hour (6.4 million a year), 201 times your average employees’ salary, maybe you should imagine yourself in their shoes for one minute of your over-paid day. Bill Johnson, why don’t you make a definitive statement to the employees that work hard everyday to allow you to maintain your lavish lifestyle? Assure all your employees with a clear statement of what you will do to ensure your multi-million dollar windfall won’t be at the expense of their modest homes, vehicles and credit scores. You slashed the company’s severance packages last year, and now you plan to let your employees and their families endure emotional stress you couldn’t possibly imagine until they either find a substantially lower paying job or get laid-off when the merger does happen. How about stepping up to the plate and quickly announ

  • rhess2 Jan 11, 2011

    Progress Energy and Duke Energy announced their merger, but as in most mergers one company buys out the other. In this case Duke Energy will own 63% of the company with a majority of 11 on the Board. Already it appears they are calling the shoots by retaining the Duke Energy name and headquarters in Charlotte. What the merger means for customers remains to be seen. It does seem clear for both companies and their shareholders it will be a financially good move. I'm not so sure what it means for Progress Energy employees now headquartered in Raleigh. I do agree with Raleigh Mayor Charles Meeker loosing the only Fortune 500 Company located in the City will be a loss to the economy. While time will reveal the wisdom in the merger, one can't help but wonder if it more for the benefit of their operations and shareholders less about their employees and customers.

  • KEB59 Jan 10, 2011

    Why did the boards of these two companies vote in secret last week?

  • KEB59 Jan 10, 2011

    One inefficient org consumes another: end consumer pays the bill and Raleigh jobs disolve.

    CEO Bill will lose megabucks job.

  • boturner2 Jan 10, 2011

    johnnyplusthree, You're playing a bit loose with your facts too.
    One of the prime directives of the Utilities Commissionis to assure a minimal level of profit by the Company. Usually the companies have been allowed 5% regardless of their cost. This does NOT promote good management practice! Personally, I do hope more Nuclear Plants can be built, but you have Obama and his minions who plan to fight this tooth and nail! RivaRascal75

  • A Libertarian Jan 10, 2011

    The reason for the merger is to be able to build nuclear power whcih is by far the cheaoest and cleaner, yet you complain maning up lies on the way.

  • A Libertarian Jan 10, 2011

    Lets look at the facts - Duke has some of the lowest rates ub tge country. Fact - people on the left complain when using coal or drilling for oil / nat gas - yet complain when prices go up being force to use wind / solar which does not work.

  • A Libertarian Jan 10, 2011

    awake - just so you know, the utilities commision does NOT determine profits. The set the rates. The rest of your liberals and socialists, you guys are making stuff up on how bad it is, but yet no facts.

  • Mr. Sensible Jan 10, 2011

    Oh yeah,, It just went down 4 cents / killowatt hour. It don't need to go back up just cause yawl changed hands.

  • Mr. Sensible Jan 10, 2011

    Just keep my power on.. It never used to go out when I was a kid around here.