Duke Energy to acquire Cinergy
Another step in the gradual consolidation of the US power utility industry came with the announcement by major utility Duke Energy that it would trade $9.1 billion in stock to buy out Cinergy Corp. Duke Energy's main operations are centered in the Carolinas, where its is the leading electrical utility and it is also a major supplier of natural gas, with customers in the US and Canada (through its Union Gas subsidiary). It also extensive electrical generation capacity in gas-fired plants owned by a subsidy called DENA. In addition, it owns power plants in several Latin American companies. The company also develops real estate.
Cinergy Corp. owns electric and gas utilities in Indiana, Ohio, and Kentucky, including Cincinnati Gas & Electric and PSI Energy. It also owns a number of coal-based electric generation plants. The two companies' combined electric operations would put them in the top 5 in the US, and its natural gas operations would be #1,
Duke may spin off the natural gas operations to help finance the deal, and regulators may make some other conditions to allow other power-generating companies to supply electricity to Cinergy. Further targets may be acquired to fill in the geographical grid, including DPL Inc. of Ohio and Dominion Resources of Virginia.
According to a Wall Street Journal article ('Duke to Buy Cinergy For $9.1 Billion", 5/10/05):
Consolidation of the utility sector, broadly expected five years ago, slowed to a crawl after Enron Corp.'s bankruptcy filing in late 2001, which halted the deregulation movement. But there are indications merger activity may be picking up, now that many utility companies have worked their way out of difficulty. In December, Chicago-based Exelon Corp. said it will merge with Public Service Enterprise Group Inc. of New Jersey.
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