Duke Bids $13.7 Billion for Progress Energy

Duke Energy agreed to pay $47.48 a share for Progress Energy on Monday, in a deal valued at $13.7 billion.
The tie-up with create the country’s largest utility, with $22.7 billion in revenue and more than 7 million customers in six states, including North Carolina, South Carolina, Florida, Indiana, Kentucky and Ohio.
The boards of both companies unanimously approved the all-stock deal, which is expected to be accretive to profits in the first year.
“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,” said Jim Rogers, chairman, president and chief executive officer of Duke Energy, in a statement. “By merging our companies, we can do that more economically for our customers, improve shareholder value and continue to grow.
It’s the latest in a slew of utility deals, as companies seek to cut costs and combat falling prices by boosting their customer bases. Energy and power deals made up the biggest share of merger activity in 2010, accounting for 20 percent of announced takeovers, based on Thomson Reuters data.
Duke bought Cinergy of Ohio in 2005 in a $9 billion all-stock deal.
Shares in Progress have risen more than 3 percent since DealReporter first reported on potential deal talks on Thursday afternoon. The company’s stock closed at $44.72 on Friday
The $47.48 a share bid represents a 6.6 percent premium to the average closing of Progress Energy in the last 20 trading days ending Jan. 5, 2011, and a 6.4 percent over the last 20 days ending Jan. 7, 2011.
The companies hope to have the deal completed by the end of 2011. Several regulators will have to sign off. Among them: the Federal Energy Regulatory Commission, the Nuclear Regulatory Commission (NRC) and two state authorities.
After the merger, Mr. Rogers is expected to become executive chairman, a capacity in which he will advise the chief executive on strategy and be company’s main voice on energy policy.
Bill Johnson chairman, president and chief executive officer of Progress Energy will become president and chief executive officer of the newly formed company, to be called Duke Energy.
“This combination of two outstanding companies is a natural fit,” said Mr. Johnson, in a statement. “It makes clear strategic sense and creates exceptional value for our shareholders.”
Duke was advised by JPMorgan Chase, Bank of America Merrill Lynch and the law firm Wachtell, Lipton, Rosen & Katz. Progress was advised by Lazard, Barclays Capital and the law firm Hunton & Williams.