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Duke Energy and Progress Energy to merge

World Coal,

Duke Energy and Progress Energy, Inc. announced today that both companies’ boards of directors have unanimously approved a definitive merger agreement to combine the two companies in a stock-for-stock transaction. The combined company, to be called Duke Energy, will be the country’s largest utility, with:

  • Approximately US$ 65 billion in enterprise value and US$ 37 billion in market capitalisation.
  • The country’s largest regulated customer base, providing service to approximately 7.1 million electric customers in six regulated service territories (North Carolina, South Carolina, Florida, Indiana, Kentucky and Ohio).
  • Approximately 57 GW of domestic generating capacity from a diversified mix of coal, nuclear natural gas, oil and renewable resources.
  • The largest regulated nuclear fleet in the country.

“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,” said Jim Rogers, chairman, president and chief executive officer of Duke Energy. “By merging our companies, we can do that more economically for our customers, improve shareholder value and continue to grow.

“Combining Duke Energy and Progress Energy creates a utility with greater financial strength and enhanced ability to meet our challenges head-on,” Rogers continued.

“This combination of two outstanding companies is a natural fit,” said Bill Johnson, chairman, president and chief executive officer of Progress Energy. “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 of our generating plants.

“This merger also provides predictable earnings and cash flows to support our dividend payments to shareholders,” Johnson added. 

Under the merger agreement, Progress Energy’s shareholders will receive 2.6125 shares of common stock of Duke Energy in exchange for each share of Progress Energy common stock. Based on Duke Energy’s closing share price on Jan. 7, 2011, Progress Energy shareholders would receive a value of US$ 46.48/share, or US$ 13.7 billion in total equity value. Duke Energy will also assume approximately US$ 12.2 billion in Progress Energy net debt. Following completion of the merger, officials anticipate Duke Energy shareholders will own approximately 63% of the combined company and Progress Energy shareholders will own approximately 37% on a fully diluted basis.

The companies are targeting a closing by the end of 2011.

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