Utility Merger & Acquisition Talk - CEG and DUK Buying and Selling

Includes: CEG, DUK
by: Sandy Cohen

In the last few days two rather large utility M&A announcements were made, writes utility analyst Sandy Cohen. But not for mergers of companies. Instead one company (Constellation Energy - CEG) announced an effort to buy a large power plant, and another (Duke Energy - DUK) announced its plan to sell a large fleet of power plants.

The utility industry continues to be active in M&A, and in asset purchases and sales, as these announcements show.

Constellation Energy announced its offer to buy the Dr ax power plant in Great Britain (in partnership with Perry Capital). The offer is for $3.5 billion, and early indications are it will be rejected. Dr ax has indicated it will review the cash offer, but that the offer appears below the value of the company ... which is likely to be publicly listed shortly (see: AP and Yahoo Finance News Story).

Meanwhile, Duke Energy announced it would exit its wholesale power business in all geographic areas except the Midwest (meaning in the Northeast and in the West). It will sell 6,200 MW of capacity, which is currently losing money (as much as $200 million per year), and take a $1.3 billion write-off in the 3rd Quarter, writing down the book value of the assets in question to approximately $2 billion (about $310/KW). DUK will hold a conference call today at 10 AM (9/14), 1 day ahead of its analyst meeting webcast that is being held tomorrow (9/15). See these links for more information:

DUKE Home Page
DUKE Analyst Webcast for 9/15
DUKE Plant Sale Announcement and Webcast Information for 9/14


  • Stocks mentioned in this article (clicking on a link pulls up articles for the stock in question): DUK, CEG.

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