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Duke Energy to buy Cinergy

Associated Press

CINCINNATI — Duke Energy Corp. has agreed to buy rival power company Cinergy Corp. in a stock deal worth $9 billion that will create one of the nation’s largest power generators.

The deal, announced Monday after being unanimously approved by both companies’ boards, would create an energy company with 5.4 million retail customers, more than $70 billion in assets and about $1.9 billion in annual profit on $27 billion in annual revenue. Analysts said it could augur further consolidation in the industry.

Cinergy shares rose nearly 5 percent in trading Monday afternoon on the New York Stock Exchange, while Duke shares fell 1.5 percent.

Based on market capitalization, the combined company’s electric operations would be in the top five in the United States and the natural gas operations would be the largest in North America, Paul Anderson, Duke Energy’s chairman and chief executive, said Monday.

The proposed merger would allow Duke to complement its gas-fired operations in the Midwest with Cinergy’s coal-fired plants.

“Down the road — long term — that will give us a lot more portfolio flexibility than we have had to date,” Anderson said. Analysts questioned, however, whether such flexibility would boost profitability enough to justify the merger.

James Rogers, Cinergy chairman and chief executive, said the merger puts Cinergy in a better position to meet its power generating needs in the Midwest.

“Over time, Duke’s Midwest plants would allow us to modernize our fleet faster as environmental regulations become more stringent on coal plants,” Rogers said.

The combined company will own or operate 54,000 megawatts of electric generation with operations in two thirds of the United States, Canada and internationally — primarily in Latin America.

The company will have 3.7 million retail electric customers and 1.7 million retail gas customers in Ohio, Kentucky, Indiana, North Carolina, South Carolina and Ontario, Canada.

Duke Energy, based in Charlotte, N.C., is a diversified energy company with natural gas and electric businesses and a real estate portfolio. Cinergy, based in Cincinnati, operates Cincinnati Gas & Electric Co., Union Light, Heat & Power and PSI Energy.

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