Duke Power and PanEnergy Announce $23 Billion Merger to Create Unparalled Integrated Energy Provider.CHARLOTTE, N.C.--(BUSINESS WIRE)--Nov. 25, 1996-- Duke Power Company (NYSE NYSE See: New York Stock Exchange : DUK DUK Duke Energy Corporation (stock symbol) DUK Dead Upon Keyboard ) and PanEnergy Corp (NYSE: PEL) today announced that their Boards of Directors have approved a definitive merger agreement for a tax-free, stock-for-stock transaction creating an integrated energy company with a total market capitalization Total Market Capitalization The total market value of all of a firm's outstanding securities. of approximately $23 billion ($17 billion in equity and $6 billion in debt and preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. ). Under the agreement, each PanEnergy share would be converted into 1.0444 shares of Duke Power. Based upon Duke Power's closing price of $47.875 on November 22, 1996, Duke Power will issue approximately $7.7 billion in stock to PanEnergy stockholders to complete the transaction. PanEnergy stockholders will own approximately 44 percent of the common stock of the company. The transaction will be accounted for as a pooling of interests Pooling of Interests An accounting method, used in mergers and acquisitions, where the balance sheet items of the two companies are simply added together. Notes: The opposite of pooling of interests is the purchase acquisition method. and is anticipated to become accretive towards the end of the second year after the completion of the transaction. At closing, Duke Power Company will change its name to Duke Energy Corporation. The proposed combination would create an unparalleled integrated energy provider that unites Duke Power, one of the nation's largest investor-owned electric utilities serving 1.8 million customers, with PanEnergy, one of the nation's leading energy services companies handling over 15 percent of the natural gas consumed in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . Duke Power currently pays an indicated annual dividend of $2.12 per share. Accordingly, PanEnergy's shareholders will receive an increase of $1.25 in dividends per share Dividends per share Dividend paid for the past 12 months divided by the number of common shares outstanding, as reported by a company. The number of shares often is determined by a weighted average of shares outstanding over the reporting term. , based on the implied exchange ratio, from PanEnergy's current indicated dividend Indicated Dividend The total dividends that would be paid on a share of stock throughout the next year if each dividend is the same amount as the previous payment. Notes: For example, if General Motors paid a dividend of $0. of $0.96 per share. William H. Grigg, chairman and chief executive officer of Duke Power, said, "This strategic merger is about growth, opportunity and creating value. Each of our companies has a recognized name and a strong reputation in our industries. This combination creates the preeminent pre·em·i·nent or pre-em·i·nent adj. Superior to or notable above all others; outstanding. See Synonyms at dominant, noted. [Middle English, from Latin prae provider of energy and energy services in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. . Duke Power and PanEnergy share the vision that customer choice is the driver of the energy services marketplace of the future. In our dramatically changing industry, we need to define ourselves by our customers' needs, not by our traditional product offerings. Companies that are positioned to help their customers find business solutions that optimize a broad array of energy products and services at competitive prices will be rewarded with satisfied shareholders, customers, and employees. "We at Duke Power realized that the implementation of our strategic goals required a partner who shares our vision," Mr. Grigg continued. "We will continue to be committed to our core electric business. However, both Duke Power and PanEnergy realize that the convergence of the gas and electricity industries means that a combined company would achieve distinct advantages not available to either on a stand alone basis. The combination brings together one of the largest and lowest-cost investor-owned electric utilities in the country with PanEnergy, North America's third largest marketer of natural gas, the fourth-largest U.S. natural gas liquids producer and owner of one of the nation's leading interstate natural gas pipeline networks. Our companies are committed to forging a union based on profitability, opportunity, efficiency and growth. "In forming this partnership with PanEnergy, we have aligned ourselves with a team of management and Board members that has successfully navigated through a period of deregulation Deregulation The reduction or elimination of government power in a particular industry, usually enacted to create more competition within the industry. Notes: Traditional areas that have been deregulated are the telephone and airline industries. and profound changes in the natural gas industry. The skills that Mr. Anderson Mr. Anderson can refer to several fictional characters:
Paul M. Anderson, president and chief executive officer of PanEnergy, said, "Over the last two years, PanEnergy has emerged as a mega-marketer of natural gas with an expanding presence in other energy forms. As the gas and electric markets have begun to converge, we have recognized a need to align ourselves with an electric partner. Duke Power is the acknowledged industry leader in providing safe, reliable, responsive and economical service to its customers. It is upon this bedrock that we will build a true industry pacesetter in the field of energy services. Moreover, Duke Power is recognized as having engineering and global power asset management skills which rank it among the best. I cannot imagine a better company for PanEnergy to join with in pursuing its strategic vision. PanEnergy shareholders will have a substantial ownership interest in a financially strong company with excellent access to financial markets and a solid record of earnings and dividend growth." "We expect the unregulated Adj. 1. unregulated - not regulated; not subject to rule or discipline; "unregulated off-shore fishing" regulated - controlled or governed according to rule or principle or law; "well regulated industries"; "houses with regulated temperature" 2. business segments to generate significant incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. for Duke Energy through the marketing of energy products and services both nationally and internationally," Mr. Anderson continued. "We estimate incremental annual pre-tax income to be approximately $225 million by the year 2000. PanEnergy currently gathers and processes 2.7 Trillion British thermal units British thermal unit, abbr. Btu, unit for measuring heat quantity in the customary system of English units of measurement, equal to the amount of heat required to raise the temperature of one pound of water at its maximum density [which occurs at a temperature of 39. (TBtu) of natural gas and markets 7.2 TBtu each day. Combining this natural gas business base with Duke Power's knowledge of the electric generation business, its experience in serving electric customers, and its customer base, Duke Energy will have marketing expertise and market reach far beyond what either company could achieve on its own." "Duke Energy will have the ability to offer physical delivery and management of both gas and electricity in multiple regions of the country through PanEnergy's extensive pipeline system and Duke Power s well-managed electric transmission grid," Mr. Anderson continued. "These systems will be managed together in a new energy transportation group giving Duke Energy the flexibility required to better serve its customers and respond to market forces. Owning diverse physical assets will enable us to optimize the delivery of energy to our customers. The energy services group will build upon the demonstrated success of each company's existing energy marketing ventures: PanEnergy Trading and Market Services, L.L.C. venture with Mobil Corporation and the Duke Energy Group, Inc. power marketing venture with Louis Dreyfus Electric Power." "The combination of PanEnergy and Duke Power will capture the opportunities that are developing in the new energy services environment," said Dennis Hendrix, chairman of PanEnergy. "It will create a platform to market, trade and arrange physical delivery of energy products and services on a large scale to all major market areas. The new company will also create expanded opportunities in international markets, some of which are currently served by Duke Power and PanEnergy. This will increase our ability to serve more customers and offer them comprehensive packages of energy resources and management services." Richard B. Priory, president and chief operating officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. of Duke Power, said, "This is a compelling combination for customers, shareholders and employees of Duke Power and PanEnergy. Our customers will benefit from one-stop shopping for the provision -- and management -- of their energy needs. Shareholders will participate in the earnings and growth opportunities created by a new market leader in energy services that intends to build on a track record of sustained financial strength. Our employees will share in the opportunity to be part of a larger company, positioned for leadership in the emerging energy services industry. The economic potential of this transaction lies primarily in revenue enhancements revenue enhancement An increase in revenues, especially by way of increased taxes. Revenue enhancement includes reducing taxpayer deductions and eliminating tax credits. and strategic positioning, not cost cutting." "Our goal is to build a company that combines the best of both worlds -- building on Duke Power's superb reputation for reliability and service and its deep roots in the Carolina communities while taking the steps necessary to ensure that the company will prosper in the era of regulatory change that we believe is inevitable across the country and around the globe. The merger of PanEnergy and Duke Power combines two powerful, innovative companies eager to join forces to win in the energy marketplace of the twenty-first century," Mr. Priory added. Upon completion of the merger, Richard B. Priory, currently president and chief operating officer of Duke Power, will become chairman and chief executive officer of Duke Energy; Paul M. Anderson, president and chief executive officer of PanEnergy, will become president and chief operating officer of Duke Energy; and William H. Grigg, currently chairman and chief executive officer of Duke Power, will retire. Dennis Hendrix will step down as chairman of PanEnergy effective with the merger and will join Duke Energy's board. The board of directors of Duke Energy will be made up of 18 members, eleven from Duke Power and seven from PanEnergy. The company will be headquartered in Charlotte, with Houston serving as the center for PanEnergy's pipeline operations, trading and marketing services, and certain business development activities. After the completion of the merger, PanEnergy will be a wholly-owned subsidiary of Duke Energy. Under the merger agreement, there are no changes required with respect to either company's public debt issues or the outstanding preferred stock of Duke Power. The merger is conditioned, among other things, upon the approval of the holders of a majority of the PanEnergy common shares outstanding and a majority of the Duke Power common shares voting, and the completion of appropriate state and federal regulatory procedures. The companies anticipate that the regulatory procedures can be completed in less than 12 months. Barr Devlin Associates and Morgan Stanley  To comply with Wikipedia's , the introduction of this article needs a complete rewrite. & Co. Incorporated acted as financial advisors and provided fairness opinions Fairness OpinionA report put together by qualified analysts or advisors providing to key decision makers an evaluation of and facts about a merger or acquisition. Notes: A fairness opinion serves as a document used for guidance in a merger, takeover, or acquisition. to Duke Power. Merrill Lynch Merrill Lynch & Co., Inc. (NYSE: MER TYO: 8675 ), through its subsidiaries and affiliates, provides capital markets services, investment banking and advisory services, wealth management, asset management, insurance, banking and related products and services on a global basis. & Co. and Lehman Brothers Lehman Brothers Holdings Inc. (NYSE: LEH), founded in 1850, is a diversified, global financial services firm. It is a participant in investment banking, equity and fixed income sales, research and trading, investment management, private equity, and private banking. Inc. acted as financial advisors and provided fairness opinions to PanEnergy. PanEnergy Corp -- one of North America's leading energy services companies -- operates more than 37,000 miles of natural gas pipeline, delivering gas primarily to Northeast and Midwest markets. The company is also one of the nation's largest natural gas gatherers and processors and markets liquefied petroleum gases liquefied petroleum gas or LPG, mixture of gases, chiefly propane and butane, produced commercially from petroleum and stored under pressure to keep it in a liquid state. and related energy services throughout the United States and Canada. Through its recently formed venture with Mobil, PanEnergy is one of the leading marketers of natural gas and electricity in North America. The company also has other energy interests worldwide. Duke Power is one of the nation's largest investor-owned electric utilities. Headquartered in Charlotte, NC, it serves 1.8 million residential, commercial and industrial customers in a 20,000 square-mile service area in North Carolina North Carolina, state in the SE United States. It is bordered by the Atlantic Ocean (E), South Carolina and Georgia (S), Tennessee (W), and Virginia (N). Facts and Figures Area, 52,586 sq mi (136,198 sq km). Pop. and South Carolina South Carolina, state of the SE United States. It is bordered by North Carolina (N), the Atlantic Ocean (SE), and Georgia (SW). Facts and Figures Area, 31,055 sq mi (80,432 sq km). Pop. (2000) 4,012,012, a 15. . The company operates a diversified generating system consisting of three nuclear generating stations, eight coal-fired generating stations and 38 hydroelectric plants. In addition to its regulated activities, Duke Power also has several non-regulated businesses whose services include electric power facility development and management; real estate development; energy and environmental engineering services; construction services; merchandising; and telecommunications. This press release includes 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. Although Duke Power believes that its expectations are based on reasonable assumptions, it can give no assurance that its goals will be achieved. Important factors that could cause actual results to differ materially from those in the forward looking statements herein include the pace of deregulation of retail natural gas and electricity markets in the United States, federal and state regulatory developments, the timing and extent of changes in commodity prices for oil, gas, coal, electricity and interest rates, the extent of success in connecting natural gas supplies to gathering and processing systems and in connecting and expanding gas and electric markets, the performance of electric generation, pipeline and gas processing facilities, decommissioning Decommissioning is a general term for a formal process to remove something from operational status. Some specific instances include:
Note to Editors: Today's news release, along with other news about Duke Power and PanEnergy, is available on the Internet at: http:\\www.dukepower.com AND http://www.naturalgas.com/pec. SATELLITE UPLINK FOR DUKE POWER/PANENERGY B-ROLL: November 25, 1996 10:00 - 10:30 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy and 1:30 - 2:00 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. C-Band Galaxy 9; Transponder 6 If you have any technical questions or problems with the satellite feed for Duke Power/PanEnergy B-roll, please call Emy Nakase at 212/627-5622. CONTACT: Duke Power Company Joe Maher, media, 704/382-8323 Allen Stewart, Investors, 704/382-5087 or PanEnergy Corp. John Barnett John Barnett (1802—16 April 1890) was an English composer and writer on music. Life Barnett was the eldest son of a Prussian Jew named Bernhard Beer, who changed his surname on settling in England as a jeweller. , Media, 713/627-4072 Brad Porlier, Investors, 713/627-4600 |
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