Merger of Duke Energy and Progress Energy Creates Nation's Largest Utility

The $13.7 billion stock-based merger of Duke Energy and Progress Energy (combined company to be called Duke Energy) on Jan. 10, 2011 created the country's largest utility company and biggest regulated customer base, providing service to approximately 7.1 million electric customers in six regulated service territories of North Carolina, South Carolina, Florida, Indiana, Kentucky and Ohio. This merger has it's advantages and disadvantages.

Progress Energy shareholders will receive about $13.7 billion in total equity value while Duke Energy will be assuming about $12.2 billion in Progress Energy debt, so that leaves about $1.5 billion for the actual price or cost of the buy-out..er, I mean of the "merger".

Advantages of Duke Energy/Progress Energy Merger:
-Approximately 57 gigawatts of domestic generating capacity from a diversified mix of coal, nuclear, natural gas, oil and renewable resources.
-Almost $65 billion in enterprise value and $37 billion in market capitalization.
-The largest regulated nuclear fleet in the country.
-The country's largest regulated customer base of approx. 7.1 million electric customers from the Carolinas, and Florida, to Indiana, Kentucky and Ohio.

I really do hope that with this merger, the extra monies gathered can be put to good use and they're not just talking a bunch of malarkey. We really do need a major renovation on our power market, with better use of natural resources and less money going towards greedy politicians.

Jim Rogers, chairman, president and chief executive officer of Duke Energy said, "Our industry in entering a building phase where we must invest in an array of new technologies to reduce our environmental footprints and become more efficient. By merging our companies, we can do that more economically for our customers, improve shareholder value and continue to grow."

While Bill Johnson, chairman, president and chief executive officer of Progress Energy said the merger was a natural fit and that, "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 our our generating plants." -"This merger also provides predictable earnings and cash flows to support our dividend payments to shareholders," Johnson added.

Disadvantages of Duke Energy/Progress Energy Merger:
According to a statement from the two companies, job reductions at both companies are anticipated, although they have no predetermined number or goal. They have pledged to look for savings in other areas first, such as fuel efficiencies. Positions wouldn't be eliminated until the merger is approved, which is expected to take about a year, and phased over several years through integrating operations.
This merger basically puts a monopoly on the electric front and may cause future headaches for customers in pricing, but hopefully, (I say with crossed fingers), they will, with their newly appointed monies for bigger fuel buying power actually cut costs.

Jim Rogers (Duke) will become executive chairman of the new organization. He will advise the CEO on strategic matters, play an active role in gov't. relations and serve as the company's lead spokesperson on energy policy, while Johnson (Progress Energy) will become president and (CEO) chief executive officer of the new company. Both will serve on the board composed of 18 members with 11 designated by Duke's BOD (board of directors) and 7 by Progress Energy's BOD, headquartered in Charlotte, NC. Until the merger has received all necessary approveas and has closed, the companies will continue to operate as separate entities. Customers will see no change at least until next year. Customers including: Progress Energy Carolinas and Progress Energy Florida and Duke Energy Carolinas, Duke Energy Indiana, Duke Energy Ohio, Duke Energy Kentucky, Commercial Power, Duke Energy Generation Services and Duke Energy International.

Notes from DukeEnergy.com:

• $26 Billion Transaction Will Create Nation's Largest Utility with a Combined Enterprise Value of $65 Billion
• Diversified Generation Portfolio in Six Regulated Service Territories
• Transaction Expected to be Accretive to Adjusted Diluted Earnings in First Year

About Duke Energy
Duke Energy is one of the largest electric power holding companies in the United States. Its regulated utility operations serve approximately 4 million customers located in five states in the Southeast and Midwest, representing a population of approximately 11 million people. Its commercial power and international business segments own and operate diverse power generation assets in North America and Latin America, including a growing portfolio of renewable energy assets in the United States. Headquartered in Charlotte, N.C., Duke Energy is a Fortune 500 company traded on the New York Stock Exchange under the symbol DUK. More information about the company is available on the Internet at: www.duke-energy.com .
About Progress Energy
Progress Energy (NYSE: PGN), headquartered in Raleigh, N.C., is a Fortune 500 energy company with about 22,000 megawatts of generation capacity and approximately $10 billion in annual revenues. Progress Energy includes two major electric utilities that serve about 3.1 million customers in the Carolinas and Florida. The company has earned the Edison Electric Institute's Edison Award, the industry's highest honor, in recognition of its operational excellence, and was the first utility to receive the prestigious J.D. Power and Associates Founder's Award for customer service. The company is pursuing a balanced strategy for a secure energy future, which includes aggressive energy-efficiency programs, investments in renewable energy technologies and a state-of-the-art electricity system. Progress Energy celebrated a century of service in 2008. Visit the company's website at www.progress-energy.com .

Resources:
Duke Energy News Release; www.duke-energy.com/news/releases/2011011001.asp
Duke Energy.com; www.duke-energy.com .
Progress Energy; www.progress-energy.com .