Duke Power To Purchase Panenergy For $7.7 Billion
HOUSTON - Electric utility Duke Power will acquire natural-gas distributor PanEnergy for $7.7 billion in stock, the latest combination of an electric company with a gas-pipeline operator.
The combined company will be known as Duke Energy and would rival the pending combination of Enron with Portland General as the biggest gas and electric company.
The merger is part of a trend, driven at least partly by easing government regulations, as electric and natural-gas companies combine to offer one-stop energy shopping for businesses and residential customers. In Washington, for instance, Puget Sound Power & Light has proposed merging with Washington Energy, whose major subsidiary is Washington Natural Gas.
"As the gas and electric markets have begun to converge, we have recognized a need to align ourselves with an electric partner," said Paul Anderson, president and chief executive of PanEnergy.
Charlotte, N.C.-based Duke serves 1.8 million customers in North Carolina and South Carolina. But the deal is more about breaking out of old boundaries to offer electricity and gas to big companies in several regions of the country as curbs are relaxed.
None of PanEnergy's 37,000 miles of pipeline cross Duke's home territory. Houston-based PanEnergy operates mostly in the Midwest and Northeast and is the third-largest gas marketer in the country.
Bruce Williamson, vice president of finance at PanEnergy, said a small number of duplicated jobs may be eliminated. Duke will pay 1.0444 shares of its stock for each PanEnergy share.
PanEnergy's stock was up $1.375, to $43.625, in late trading today. Duke was down $1.875 at $46.
William Grigg, chairman and chief executive of Duke Power, said the companies expect to be able to grow faster under the merger.
The deal depends on approval by PanEnergy and Duke Power shareholders as well as state and federal regulatory agencies.
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