Duke Energy Corporation
(
DUK
) announced that it has acquired Progress Energy Inc., effective
July 2, 2012. North Carolina-based Progress Energy was a pure-play
electricity utility. The company engaged in regulated electricity
operations in the southeastern U.S.
The new company would be known as Duke Energy with headquarters in
Charlotte, and substantial operations in Raleigh, North Carolina.
Duke Energy would trade on the New York Stock Exchange under the
symbol "DUK". Pursuant to the merger deal, Progress Energy has
become a wholly owned direct unit of Duke Energy.
When the merger was announced on January 10, 2011, the transaction
value totaled $26 billion, including Progress Energy's debt.
Currently based on Duke Energy's share price and including Progress
Energy's debt, the transaction is valued at about $32 billion. The
transaction makes Duke Energy the largest U.S. utility and
increases its ability to build new power plants to meet future
greenhouse-gas emissions limits. Earlier, Chicago-based
Exelon Corporation
(
EXC
) was the largest U.S. utility.
In addition, Duke Energy announced that the newly constituted board
has named Mr. Jim Rogers as president and chief executive of the
combined company. Also, Rogers would maintain his responsibilities
as chairman of the company's board. Mr. Bill Johnson has resigned
as president and chief executive of the combined company.
On a standalone basis, Duke Energy had an adjusted earnings per
share guidance range of $1.40 - $1.45 for 2012. Under the terms of
the merger agreement, each share of Progress Energy common stock
has been converted into the right to receive 0.87083 shares of Duke
Energy common stock. Due to the effect of the 1-for-3 reverse stock
split, which was completed related to this merger transaction, this
guidance range is the equivalent of $4.20 - $4.35 per share. The
combined company continues to target 2012 adjusted earnings per
share range of $4.20 - $4.35. The reverse stock split is designed
to reduce the number of outstanding Duke Energy shares.
The new entity has nearly $49 billion in market capitalization,
total assets of more than $100 billion, and 7.1 million electric
customers in the Carolinas, Florida, Indiana, Kentucky and Ohio.
The regulated utilities would include a higher proportion of Duke
Energy's post-merger business mix.
Duke Energy's major commercial operations include Duke Energy
International, which operates power plants in Central and South
America; Duke Energy Renewables, which develops and owns wind and
solar projects in the U.S.; and Duke Energy's Midwest generation
and Duke Energy Retail, which generate, market and sell electricity
in the Midwest.
The merger is expected to keep the company's long-term goal of 4%
6% earnings growth in good stead.
Looking ahead, our bullish outlook for the company is supported by
higher rates, its strong balance sheet, ongoing capital expansion
projects and an above-average dividend yield for the industry.
Duke Energy, a Zacks #2 Rank ('Buy') stock, is one of the largest
electric power holding companies in the United States. We have a
long-term Neutral recommendation on the Duke Energy stock.
DUKE ENERGY CP (DUK): Free Stock Analysis
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EXELON CORP (EXC): Free Stock Analysis Report
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