Duke, Progress To Merge In $13.7 Billion Deal
Duke Energy and Raleigh-based Progress Energy announced today they will merge to become the largest regulated utility in the country. The combined company will remain headquartered in Charlotte. Some job cuts are expected. Duke Energy wants to buy Progress Energy for $13.7 billion in stock. The CEOs of the utilities say the merger is good news for shareholders - particularly those with Progress stock who will start seeing a higher dividend in line with what Duke Energy has paid. Duke CEO Jim Rogers told analysts on a conference call he'd been looking at possible acquisitions for some time: "From a strategic combination perspective, nothing can beat this transaction." Customers are likely to see lower electricity rates, too, the companies say. Duke and Progress expect to save between $600 and $800 million in fuel and dispatch costs by combining their power plant operations. With that efficiency will also come job cuts. "We're very conscious of how to go about this in a way to do it in a way that's fair to our employees but allows us to also achieve our merger savings objectives," Rogers said. Rogers said Duke will try to minimize the layoffs by offering voluntary buyouts. None of the job cuts are expected until the merger is approved by regulators. The companies say that could take about a year. The new mega-utility will be called Duke Energy, with headquarters in Charlotte, though long-time Duke CEO Jim Rogers will no longer lead day-to-day operations. Progress Energy CEO Bill Johnson will be the new chief executive. "You know, this combination allows us to do something unique, which is to operate our generating system as one company in the Carolinas," Johnson said. Rogers will have an advisory role as executive chairman of the company's board, with a special emphasis on government relations and energy policy. Charlotte Mayor Anthony Foxx says having the largest utility in the country located in the city will make the region a magnet for others in the energy industry: "It will rival our role in the financial services industry. We keep talking about diversifying and strengthening the economy and this puts a huge exclamation point on that," Foxx said.