Isra-Mart srl:Duke Energy puts green goals at heart of $13.7bn Progress Energy deal

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The urgent need to step up investment in low-carbon energy generation has emerged as the driving force behind Duke Energy's proposed $26bn acquisition of rival utility Progress Energy, a deal which will create the largest energy firm in the US if completed.

Announced yesterday, the all stock deal will see Duke Energy shell out $13.7bn to acquire North Carolina-based Progress Energy, creating a new powerhouse in the energy sector boasting 7.1 million customers, 57GW of capacity and a market capitalisation of around $37bn.

Jim Rogers, chairman, president and chief executive officer of Duke Energy, said the need to step up investment in low-carbon forms of energy was one of the main drivers behind the deal.

"Our industry is entering a building phase where we must invest in an array of new technologies to reduce our environmental footprints and become more efficient," he said in a statement. "By merging our companies, we can do that more economically for our customers, improve shareholder value, and continue to grow."

His comments were echoed by Progress chief executive William Johnson who told news agency Bloomberg that the deal would make it "more feasible" for the expanded company to invest in new nuclear reactors.

The deal, which values Progress at a 3.9 per cent premium on its closing price last week, will require regulatory approval and represents the first test of competition regulators' willingness to wave through the consolidation of the energy market that many analysts believe is necessary if utilities are to step up investment in new low-carbon capacity and grid infrastructure.

However, analysts expressed optimism the deal would gain the necessary approval from state regulators.

Duke Energy remains one of the largest generators of coal-fired energy in the US, but has invested heavily in diversifying its energy mix, emerging as a major player in the fast-expanding wind and solar energy sectors. Rogers also established himself as a prominent campaigner in favour of the proposed climate bill that was defeated last year in the Senate, with the company actually leaving a number of industry groups due to their opposition to carbon regulations.