StreetInsider.com - Duke Energy (DUK), Progress Energy (PGN) $13.7 Deal to Create Largest US Energy CompanyDuke Energy (NYSE: DUK) announced Monday that it has agreed to buy Progress Energy (NYSE: PGN) for $13.7 billion in stock, which will create the largest power company in the U.S.
The two North Carolina companies would create a business that holds about 7.1 million electric customers in the Southeast and Midwest, while also holding a sizable nuclear energy business.
Under the terms of the agreement, shareholders of Progress Energy will receive 2.6125 shares of Duke common stock in exchange for each share of Progress common stock.
This would value Progress shares at $46.48 per share based on the closing price of Duke shares on Friday, a 7.1 percent premium over the Friday closing price of Progress stock.
Duke will also assume roughly $12.2 billion in Progress net debt.
Duke chairman, president and CEO Jim Rogers will become executive chairman of the new company, while Progress CEO Bill Johnson will become President and top executive.
"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 Rogers. "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."
The companies expect the deal to close by the end of the year. Duke said it is expected to boost earnings within a year following the close.
Shares of Duke are down 19 cents to $17.60 in premarket trade on Monday, while shares of Progress are down 72 cents to $44.00.
