Duke to buy Cinergy for nearly 9 billion
The move boosts Charlotte, North Carolina-based Duke's presence in the U.S. Midwest, particularly in the retail electric and gas business, while offering cost savings on the merchant power front.
Under the terms of the deal, each Cinergy share will be converted into 1.56 shares of Duke Energy. Cincinnati-based Cinergy has an average of about 198 million shares outstanding, according to a company spokesman, which would value the deal at about $9 billion.
Duke's offer was worth $45.80 a share, a 13.4 percent premium to Cinergy's closing share price on Friday of $40.38 a share.
"For Cinergy shareholders this is a home run," said Gordon Howald, analyst with Natexis Bleichroeder. "It's a natural extension of where they've been headed."
About 1,500 jobs - or about 5 percent of the companies' combined work force of 29,350 - will be cut, mainly through attrition, early retirements and other severance programs.
The combined company will own or operate about 54,000 megawatts of electric generation domestically and overseas.
Following the deal, Cinergy shareholders will own about 24 percent of the company while Duke Energy shareholders will own the remaining 76 percent.
The deal will be accretive to Duke's earnings in the first full year of operation.
Duke's Chief Executive Paul Anderson will become chairman of the combined company while Cinergy's top executive James Rogers will assume the post of CEO and president.
Duke Energy also said it would raise its dividend 12.7 percent.
The companies expect to make required regulatory filings by July and receive the necessary approvals in about 12 months.
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She says rate-regulated…
