If approved by shareholders and by government regulators, the deal with be largest ever to be consummated by companies from the electricity and gas sectors of the power industry. Duke Power and PanEnergy will have a combined market value of $23bn. The new company will be called Duke Energy.
"As the gas and electric markets have begun to converge, we have recognised a need to align ourselves with an electric partner," Paul Anderson, president of PanEnergy, said.
Duke Energy has a strong reputation as one of America's largest and most efficient electric utilities with 1.8 million customers in the Carolinas. PanEnergy, based in Houston, is the country's third-largest distributor of natural gas with 37,000 miles of pipeline in the Mid-west and North- east.
Spurred by deregulation, the consolidation of America's power concerns offers customers, industrial and residential, the chance to shop one-stop for their energy needs.
Other recent transactions have included the purchase by Enrons Corp of Houston, America's largest natural gas supplier, of Portland General Corp.
The drive to expand has also led several US electric utilities to look abroad for acquisitions and, in particular, to the UK where deregulation has also taken effect. Recent examples have included the outstanding bid of Idaho-based CalEnergy for Northern Electric.
In a tax-free stock swap, Duke is to trade 1.0444 shares of its stock for every share in PanEnergy, representing an 18.3 per cent premium over PanEnergy's closing price last Friday of $47.87. Both companies expect the deal to be completed within 12 months.
"This strategic merger is about growth, opportunity and creating value," said William Grigg, chairman of Duke.
"Each of our companies has a recognised name and a strong reputation in our industries. This combination creates the pre-eminent provider of energy and energy services in North America."Reuse content