Duke Said to Name Progress’s Johnson CEO After Merger
Duke Energy Corp. is nearing an agreement to buy Progress Energy Inc. and put Progress Chief Executive Officer William Johnson in charge of what will be the largest U.S. utility, said three people with knowledge of the matter.
Duke, led by Chairman and CEO James Rogers, may announce as early as tomorrow a stock merger valuing Raleigh, North Carolina-based Progress at slightly more than its Jan. 7 market value of $13.1 billion, people with knowledge of the matter said. Rogers, 63, plans to hand off the Duke CEO job to Johnson, 57, and to remain on the board, the three people said, speaking on condition of anonymity because the talks are private.
Rogers has been a leading voice for the power sector in the U.S. climate legislation debate, supporting efforts last year for a federal cap-and-trade law that would also protect the financial interests of utilities.
Johnson joined Progress Energy in 1992 and rose to the position of chief executive in October 2007, according to the company’s website. He serves on the executive committees of the Edison Electric Institute and the Nuclear Energy Institute.
Tom Williams, a spokesman for Charlotte, North Carolina- based Duke, declined to comment. Mike Hughes, a spokesman for Progress Energy, also declined to comment.
Rogers’ contract with Duke expires on Dec. 31, 2013, Williams said.
“The closer a chief executive officer gets to retirement, the more likely a merger or acquisition is going to happen,” said Paul Patterson, an analyst at Glenrock Associates LLC in New York, in a telephone interview today. Patterson owns shares of Progress and doesn’t own shares of Duke.
Rogers is seeking to expand his regulated utility business after losing to PPL Corp. in a bidding contest last year for E.ON AG’s Kentucky electricity distributors. A deal for Progress would add units that operate near his service territories in North Carolina and South Carolina, as well as an electric distribution unit in Florida. Progress also owns more than 22,000 megawatts of power generation capacity, according to its website.
“There should be substantial cost savings with the companies being so close to each other,” Patterson said.
Acquisitions in the U.S. power industry have picked up as companies seek to add customers to counter falling prices. Utilities expanding through mergers can also spread the cost of complying with environmental regulations or building new power plants across more customers. Regulators generally allow utilities to bill consumers for reimbursement of those costs.
Duke supplies energy to about 4 million utility customers in North Carolina, South Carolina, Indiana, Ohio and Kentucky, according to its website. It has about 35,000 megawatts of electric generation capacity. Progress has about 3.1 million utility customers, according to its website.