City Of London (LSE:CIN)
Historical Stock Chart
From May 2019 to May 2024
Cinergy and Duke Energy Agree to Merge; Creates Energy Company
With $36 Billion Market Capitalization
* Duke Energy dividend to be increased 12.7 percent for an annual dividend of
$1.24 * Combined company to have more than $70 billion in total assets * All
stock transaction; each common share of Cinergy to be converted into 1.56
shares of Duke Energy * Duke Energy's Anderson to be chairman of combined
company; Cinergy's Rogers to be president and CEO
CHARLOTTE, N.C. and CINCINNATI, May 9 /PRNewswire/ -- Cinergy (CIN) and Duke
Energy (DUK) today announced they have entered into a definitive merger
agreement to create an energy company with approximately $36 billion in market
capitalization and 5.4 million retail customers.
The merger, which was unanimously approved by both companies' boards of
directors, will create a combined energy company with assets totaling more than
$70 billion.
The combined company, to be named Duke Energy Corporation, will have
approximately $27 billion in annual revenues and $1.9 billion in annual net
income (combined figures as of Dec. 31, 2004). It will own and/or operate
approximately 54,000 megawatts of electric generation domestically and
internationally -- relying on a diverse fuel mix of nuclear, coal, natural gas
and hydroelectric power to meet customers' needs. Duke Energy also operates
more than 17,500 miles of natural gas transmission pipeline with 250 billion
cubic feet of natural gas storage capacity and, through its joint venture with
ConocoPhillips, is the largest producer of natural gas liquids (NGLs) in North
America. The combined company will have operations in two-thirds of the United
States, as well as Canada and several other international locations --
primarily in Latin America.
By combining resources and best practices, the merger will enhance operations
and create efficiencies at all levels of the new company, including generation,
transmission and distribution as well as power and gas marketing.
Under the merger agreement, each common share of Cinergy will be converted into
1.56 shares of Duke Energy upon closing of the merger. Based on the closing
prices on May 6, Cinergy investors will receive a premium of 13.4 percent.
Following the merger, Cinergy shareholders will own approximately 24 percent,
or about 310 million shares, of Duke Energy pro-forma shares outstanding, and
Duke Energy shareholders will own approximately 76 percent of the total 1.3
billion shares. The transaction will be accretive to Duke Energy's earnings in
the first full year of operation.
Upon completion of the merger, Paul M. Anderson, currently chairman and chief
executive officer of Duke Energy, will become chairman of the board of the
combined company. James E. Rogers, currently chairman, president and chief
executive officer of Cinergy, will become president and chief executive
officer. The new board will be comprised initially of 10 members named by Duke
Energy and five members named by Cinergy.
"The combination of Duke Energy and Cinergy will create a rock-solid portfolio
of electric and gas businesses, increasing value for our shareholders
immediately and in the longer term," said Anderson. "This union is a great
strategic fit and leaves us well positioned for continued consolidation in the
energy sector as both the electric and gas businesses will have the scale to
stand alone. Importantly, it also provides an immediate and significant
improvement for our merchant operations and enhances their future prospects.
"Just as significant as the strong strategic fit of our companies is the
cultural fit. Duke Energy and Cinergy share compatible values, operating
philosophies and views of the future," Anderson said.
"The increased scope and scale will make the combined company a major industry
leader with a strong balance sheet, complementary assets and a low- cost
generation portfolio," said Rogers. "Both companies are known for operational
excellence as well as strong customer service and reliability.
"We are creating a top-tier energy company that will assume a key leadership
role in the future of our industry while delivering benefits to all of our
stakeholders. Moreover, this combination creates a stronger platform from
which to continue our leadership in finding practical solutions to the
environmental challenges facing our industry and country."
Benefits of the Merger
The merger will deliver significant value to customers and shareholders of both
companies:
Increased Scale and Scope of Regulated Businesses: The combined company will
create a stronger portfolio of utility businesses with 3.7 million retail
electric customers and 1.7 million retail gas customers in Ohio, Kentucky,
Indiana, North Carolina, South Carolina and Ontario, Canada. The retail
electric businesses will have more than 25,000 megawatts of generation and
broad operational and regulatory experience. Coupled with the company's
pipeline operations, the regulated businesses will contribute a substantial
percentage of stable earnings and create the financial strength and scale to
participate in the continuing consolidation of the utility sector.
Stronger Merchant Power Platform: With a fleet of more than 16,000 megawatts
of unregulated generation, the combined merchant power operation will benefit
from increased fuel and market diversity. Consolidation of the trading and
marketing units and midwestern merchant generating fleets will enhance scale
and efficiencies -- reducing the cost structure of merchant operations by
approximately $95 million during year one and $125 million per year
subsequently. Significantly, Duke Energy's gas-fired generation in the Midwest
complements Cinergy's coal-fired generation in that region. The merchant
operations, with a competitive market presence in North America and South
America, will be well positioned to participate in the continuing consolidation
of the wholesale power sector.
Increased Duke Energy Dividend Creates Immediate Shareholder Value: In
conjunction with today's merger announcement, Duke Energy's board of directors
said it intends to increase Duke Energy's dividend by 12.7 percent, or 14 cents
a year, for an annual dividend of $1.24. The dividend increase, which will be
voted on during the board's June meeting, would be effective with the September
2005 disbursement. As a result of the merger transaction and the Duke Energy
dividend increase, Cinergy shareholders will be kept whole at closing with
respect to their current dividend.
Continued Financial Strength: Increased scale and scope will also strengthen
the balance sheet of the combined company, improving financial flexibility and
positioning it well for the future. The combined company will have electric and
gas businesses with stand-alone scale. Based on implied market capitalization,
the electric business would be one of the top five in the United States; the
gas business would be the largest in North America.
Significant Synergies: The merger offers both strategic and financial
advantages in serving the energy marketplace. Not including implementation
costs, the combination will generate approximately $400 million in annual gross
synergies -- when fully realized in year three -- from across corporate
activities, regulated utilities and non-regulated marketing, trading and
generation businesses. These cost savings will result from elimination of
duplicate spending and overlapping functions, improved sourcing strategies,
avoidance of planned expenditures and the consolidation of non-regulated
business unit operations. The combined companies currently employ approximately
29,350 and expect a reduction of approximately 1,500, primarily through
attrition, early retirements and other severance programs. The companies
anticipate that upon review with state commissions, regulated savings will be
shared between customers and shareholders over time in an equitable manner.
Steadfast Community Involvement: Duke Energy and Cinergy have long been
committed to the communities in which they operate. That demonstrated
commitment will continue through local presence, economic development efforts
and corporate contributions.
Structure and Organization
Following the merger, the combined company will be a registered holding company
with corporate headquarters in Charlotte, N.C. Local headquarters of the
operating utilities will remain unchanged by the merger: Cincinnati Gas &
Electric Company and Union Light, Heat & Power will remain in Cincinnati; PSI
Energy will remain in Plainfield, Indiana; and Duke Power will continue to be
headquartered in Charlotte. Duke Energy Gas Transmission (DEGT) and certain
commercial operations will remain in Houston. Duke Energy Field Services (DEFS)
will remain headquartered in Denver and Crescent Resources will continue to be
located in Charlotte.
At the completion of the merger, Rogers will have responsibility for all Duke
Energy's business units, corporate functions and support services with the
exception of the company's gas businesses: DEGT and DEFS. At closing, Fred
Fowler, currently president of Duke Energy, will become president and chief
executive officer of these gas operations, reporting to Rogers on operations
and to Anderson on strategy, pending completion of a strategic review of the
portfolio.
Approvals and Timing
The merger is conditioned upon approval by the shareholders of both companies,
as well as a number of regulatory approvals or reviews by federal and state
energy authorities, including the North Carolina Utilities Commission, the
Public Service Commission of South Carolina, the Public Utilities Commission of
Ohio, the Kentucky Public Service Commission, the Indiana Utility Regulatory
Commission, the Federal Energy Regulatory Commission (FERC), the Nuclear
Regulatory Commission (for assurance of continuing financial qualifications and
operational standards), the Securities and Exchange Commission (SEC) and the
Department of Justice.
The new company intends to register as a holding company with SEC under the
Public Utility Holding Company Act. The companies anticipate making required
regulatory filings by July 2005, with necessary approvals obtained in about 12
months. The companies will work to secure necessary government approvals
consistent with FERC's Merger Policy Statement and the Hart-Scott- Rodino
Antitrust Improvements Act. Analyst and Media Webcast Information Analyst
Presentation: Duke Energy and Cinergy will host a conference call and webcast
for the investment community today at 10:30 a.m. EDT, in the Versailles room of
the St. Regis Hotel at 2 East 55th Street and Fifth Avenue in New York, N.Y.
The conference call can be accessed via the investors' section of both
companies at: http://www.duke-energy.com/ and http://www.cinergy.com/ or by
dialing 888/578-6632 in the United States or 719/955-1565 outside the United
States. The confirmation code is 6483076. Please call in five to 10 minutes
prior to the scheduled start time. A replay of the conference call will be
available until May 18, 2005, midnight EDT, by dialing 888/203-1112 with a
confirmation code of 6483076. The international replay number is 719/457-0820
with a confirmation code of 6483076. A replay and transcript also will be
available by accessing the investors' section of each company's Web site.
Media Availability: Duke Energy and Cinergy will also host a separate
conference call for members of the media today at 1:30 p.m. EDT. Dial-in
numbers for the media are: 800/946-0713 in the United States or 719/457-2642
outside the United States. The confirmation code is 8894744. Please call in
five to 10 minutes prior to the scheduled start time.
More Merger Information
Merger Fact Sheet:
http://www.duke-energy.com/company/aboutus/merger/merger_factsheet.pdf
Combined Company's North American Asset Map:
http://www.duke-energy.com/company/aboutus/merger/map.asp
Advisors
Duke Energy's financial advisor was UBS Investment Bank and the company also
received a fairness opinion from Lazard Ltd. Cinergy was advised by and
received a fairness opinion from Merrill Lynch and Co. Legal counsel to Duke
Energy was Skadden, Arps, Slate, Meagher and Flom LLP; and Cinergy's legal
counsel was Wachtell, Lipton, Rosen & Katz.
Corporate Profiles
Cinergy has a balanced, integrated portfolio consisting of two core businesses:
regulated operations and commercial businesses. Cinergy's integrated businesses
make it a Midwest leader in providing both low-cost generation and reliable
electric and gas service. More information about the company is available on
the Internet at: http://www.cinergy.com/ .
Duke Energy is a diversified energy company with a portfolio of natural gas and
electric businesses, both regulated and unregulated, and an affiliated real
estate company. Duke Energy supplies, delivers and processes energy for
customers in the Americas. Headquartered in Charlotte, N.C., Duke Energy is a
Fortune 500 company traded on the New York Stock Exchange under the symbol DUK.
More information about the company is available on the Internet at:
http://www.duke-energy.com/ .
Forward-Looking Statement
This document includes statements that do not directly or exclusively relate to
historical facts. Such statements are "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These forward-looking statements include
statements regarding benefits of the proposed mergers and Restructuring
Transactions, integration plans and expected synergies, anticipated future
financial operating performance and results, including estimates of growth.
These statements are based on the current expectations of management of Duke
Energy and Cinergy. There are a number of risks and uncertainties that could
cause actual results to differ materially from the forward-looking statements
included in this document. For example, (1) the companies may be unable to
obtain shareholder approvals required for the transaction; (2) the companies
may be unable to obtain regulatory approvals required for the transaction, or
required regulatory approvals may delay the transaction or result in the
imposition of conditions that could have a material adverse effect on the
combined company or cause the companies to abandon the transaction; (3)
conditions to the closing of the mergers and the restructuring transactions may
not be satisfied; (4) problems may arise in successfully integrating the
businesses of the companies, which may result in the combined company not
operating as effectively and efficiently as expected; (5) the combined company
may be unable to achieve cost-cutting synergies or it may take longer than
expected to achieve those synergies; (6) the transaction may involve unexpected
costs or unexpected liabilities, or the effects of purchase accounting may be
different from the companies' expectations; (7) the credit ratings of the
combined company or its subsidiaries may be different from what the companies
expect; (8) the businesses of the companies may suffer as a result of
uncertainty surrounding the transaction; (9) the industry may be subject to
future regulatory or legislative actions that could adversely affect the
companies; and (10) the companies may be adversely affected by other economic,
business, and/or competitive factors. Additional factors that may affect the
future results of Duke Energy and Cinergy are set forth in their respective
filings with the Securities and Exchange Commission ("SEC"), which are
available at http://www.duke-energy.com/investors and
http://www.cinergy.com/investors, respectively. Duke Energy and Cinergy
undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
Additional Information and Where to Find It
In connection with the proposed transaction, a registration statement of Deer
Holding Corp., which will include a joint proxy statement of Duke Energy and
Cinergy, and other materials, will be filed with SEC. WE URGE INVESTORS TO READ
THE REGISTRATION STATEMENT AND PROXY STATEMENT AND THESE OTHER MATERIALS
CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT DUKE ENERGY, CINERGY, DEER HOLDING CORP., AND THE PROPOSED
TRANSACTION. Investors will be able to obtain free copies of the registration
statement and proxy statement (when available) as well as other filed documents
containing information about Duke Energy and Cinergy at http://www.sec.gov/,
SEC's Web site. Free copies of Duke Energy's SEC filings are also available on
Duke Energy's Web site at http://www.duke-energy.com/investors and free copies
of Cinergy's SEC filings are also available on Cinergy's Web site at
http://www.cinergy.com/investors .
Participants in the Solicitation
Duke Energy, Cinergy and their respective executive officers and directors may
be deemed, under SEC rules, to be participants in the solicitation of proxies
from Duke Energy's or Cinergy's stockholders with respect to the proposed
transaction. Information regarding the officers and directors of Duke Energy
is included in its definitive proxy statement for its 2005 annual meeting filed
with SEC on March 31, 2005. Information regarding the officers and directors of
Cinergy is included in its definitive proxy statement for its 2005 annual
meeting filed with SEC on March 28, 2005. More detailed information regarding
the identity of potential participants, and their direct or indirect interests,
by securities, holdings or otherwise, will be set forth in the registration
statement and proxy statement and other materials to be filed with SEC in
connection with the proposed transaction.
http://www.newscom.com/cgi-bin/prnh/20040414/DUKEENERGYLOGO
http://photoarchive.ap.org/
DATASOURCE: Duke Energy
CONTACT: Media, Pete Sheffield, Phone: +1-980-373-4503, 24-Hour:
+1-704-382-8333, or Analyst, Julie Dill, Cell: +1-704-307-9035, Phone:
+1-980-373-4332, both of Duke Energy; Media, Steve Brash, Phone:
+1-513-287-2226, or Analyst, Brad Arnett, Phone: +1-513-287-3024, both of
Cinergy
Web site: http://www.duke-energy.com/
http://www.cinergy.com/investors
Company News On-Call: http://www.prnewswire.com/comp/257451.html