North Carolina–based utilities Duke Energy and Progress Energy agreed to an all stock merger valued at $13.7 billion on Monday. The combined company, to be called Duke Energy, will be the nation’s largest utility. It will have a $65 billion enterprise value, $37 billion in market capitalization, and 57 GW of domestic generating capacity—including the largest regulated nuclear fleet in the country.
Under the terms of the deal, Duke will exchange 2.6125 of its shares for each Progress share. Based on Duke’s closing share price Friday, Progress shareholders would receive $46.48 a share, a 3.9% premium to Progress’s closing price of $44.72 Friday. Duke will also assume about $12.2 billion in debt.
Closing is targeted for the end of 2011, but the merger is conditional upon the approval of shareholders of both companies and necessary regulatory filings, including with the Federal Energy Regulatory Commission, Nuclear Regulatory Commission, North Carolina Utilities Commission, and South Carolina Public Service Commission.
The merger enables the utilities to do more economically for its customers, Duke Energy Chair, President, and CEO Jim Rogers said in a statement. “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.”
Rogers will become the new combined company’s executive chairman, advising CEO Bill Johnson (currently Progress Energy’s chair, president, and CEO) on strategic matters and playing an “active” role in government relations. The company will be headquartered in Charlotte, N.C.
Both Duke Energy and Progress Energy have substantial coal fleets—and both have been making efforts to retire older units and replace them with gas plants. Johnson said on Monday that, together, the companies will shut down some 3,400 MW of coal capacity. After the merger, the companies will still have about 3,400 MW of older coal plants without pollution controls.
Both companies have also applied for new nuclear builds. Duke has filed to build two new Westinghouse AP1000 reactors at its proposed William States Lee III plant in Cherokee County, S.C., while Progress Energy has filed to build two AP1000 reactors in Levy County, Fla., and two AP1000s at its Harris Nuclear Plant site near New Hill, N.C.
Sources: Progress Energy, Duke Energy, POWERnews