CINCINNATI -Duke Energy Corp. has agreed to buy rival power company Cinergy Corp. in a stock deal worth $9 billion that will create one of the nation's largest power generators.
The deal, announced yesterday after being unanimously approved by both companies' boards, would create an energy company with 5.4 million retail customers, more than $70 billion in assets and about $1.9 billion in annual profit on $27 billion in annual revenue.
Cinergy shares rose nearly 5 percent in trading yesterday afternoon on the New York Stock Exchange, while Duke shares fell 1.5 percent.
Based on market capitalization, the combination's electric operations would be in the top five in the United States and the natural gas operations would be the largest in North America, Paul Anderson, Duke Energy's chairman and chief executive, said yesterday.
The proposed merger would allow Duke to complement its gas-fired operations in the Midwest with Cinergy's coal-fired plants.
Down the road
long term that will give us a lot more portfolio flexibility than we have had to date Anderson said.
James Rogers, Cinergy chairman and chief executive, said the merger puts Cinergy in a better position to meet generating needs in the Midwest.
Over time
Duke's Midwest plants would allow us to modernize our fleet faster as environmental regulations become more stringent on coal plants
Rogers said.
The combined company will own or operate 54,000 megawatts of electric generation with operations in two thirds of the United States, Canada and internationally -primarily in Latin America.
The company will have 3.7 million retail electric customers and 1.7 million retail gas customers in Ohio, Kentucky, Indiana, North Carolina, South Carolina and Ontario, Canada.
Duke Energy, based in Charlotte, N.C., is a diversified energy company with natural gas and electric businesses and a real estate portfolio. Cinergy, based in Cincinnati, operates Cincinnati Gas & Electric Co., Union Light, Heat & Power and PSI Energy.
Analyst Mike Heim of A.G. Edwards & Sons said he doubts the merger will trigger a new wave of consolidation in the industry as happened in the late 1990s when utilities, as a result of deregulation, were forced to shed generation or distribution assets.
Cinergy and Duke Energy expect to cut 1,500 jobs, primarily through attrition, early retirement and other severance programs. The companies have 29,350 workers.
17
Archives
The Associated Press
