The takeover of Progress Energy (NYSE: PGN) by North Carolina-based Duke Energy (NYSE: DUK), set to close on January 1, has been postponed.
According to Bloomberg, the Federal Energy Regulatory Commission rejected the proposed plans by Duke decrease competition in the area, setting back the merger until a new plan could be proposed.
The plan was to sell power at 10% higher in the Carolinas so that prices could not rise, the article says. But regulators were unhappy with these terms.
In a press release issued by Duke and Progress on Thursday, officials said:
“The companies are planning to submit a revised mitigation proposal as soon as the analysis of the commission’s order is complete and after any required notice to the North Carolina and South Carolina commissions.”
They have every intention of making the deal possible and closing it in a timely manner. But the January 1 deadline will be impossible.
The Wall Street Journal reports that the regulators have given Duke and Progress 60 days to revise the rejected terms.
The concern, Reuters said, was that the two companies have built up too much control in the areas in which they operate. They fear what this means for the power industry in the Carolinas.
As the FERC told Reuters:
“Although Duke and Progress describe the proposal as a virtual divestiture, it would not transfer control of the energy the applicants propose to sell from the merged company.”
The $16.2 billion deal is expected to close sometime in March, given the circumstances.
On Friday, Duke was down 0.43% to $20.95. Progress Energy fell 0.41% to $53.53.
That’s all for now,