Was it a “duke-out” or merely a cordial decampment? Just as Duke Energy (News - Alert) confirmed the closing of its previously announced merger with Progress Energy—an independent power company with more than 22,000 megawatts of generation capacity—its newly appointed CEO seceded from the union.
The new company is known as Duke Energy and remains headquartered in Charlotte, North Carolina, with substantial operations in Raleigh (where Progress had been based). In accordance with the terms of the merger agreement, Progress Energy Inc. has become a wholly owned direct subsidiary of Duke Energy—creating the country's largest electric utility as measured by enterprise value, market capitalization, generation assets, customers, and numerous other criteria.
Duke Energy had expected its CEO at the time of the deal, Jim Rogers, to serve as executive chairman following the merger, while Progress CEO Bill Johnson would take the chief executive position. There has been a change of plans. Now, Jim Rogers will be president and CEO of the combined utility—and Bill Johnson has resigned.
The company has not commented on the reason for Johnson’s departure, but has stated that the resignation was “by mutual agreement” and that, according to Ann Maynard Gray, lead director of Duke Energy’s board of directors, “Bill Johnson has been instrumental in helping us close the merger with Progress Energy, and we wish him well in his future endeavors."
Rogers will also maintain his responsibilities as chairman of the company's board. He remarked "The new Duke Energy will be better able to serve our 7.1 million customers' energy needs in a safe, reliable, affordable and increasingly clean manner…. Over the last several months, team members from Duke Energy and Progress Energy worked diligently to ensure we hit the ground running [on] day one. I'd also like to thank the regulatory and legal teams that were instrumental in getting us over the finish line. “
"Having served as CEO of Duke and its predecessor companies for more than 23 years, Jim Rogers is well-suited to lead the integration effort and to drive our combined businesses forward," said Ann Maynard Gray.”The board of directors looks forward to working with Jim and the rest of the executive team to enhance our position as a utility with financial strength and a greater ability to meet the needs of our customers."
Duke Energy will trade on the New York Stock Exchange under the symbol DUK. On a standalone basis, Duke Energy had adjusted diluted earnings per share (EPS) guidance range for 2012 of $1.40 to $1.45. Due to the effect of the 1-for-3 reverse stock split, which was completed in connection with this merger transaction, this guidance range is the equivalent of $4.20 to $4.35 per share. The combined company continues to target a 2012 adjusted diluted EPS guidance range of $4.20 to $4.35.
The new Duke Energy has approximately $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 will comprise 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 United States; and Duke Energy's Midwest generation and Duke Energy Retail, which generate, market and sell electricity in the Midwest.
When the merger was announced on Jan. 10, 2011, the transaction value totaled $26 billion, including Progress Energy's debt. Today, based on Duke Energy's share price and including Progress Energy's debt, the transaction is valued at about $32 billion.
To view a video sampling of the company's generation assets, click here.
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Edited by Brooke Neuman