Elliott Urges Duke Energy to Consider Separation Into Three Companies -- Update
By Cara Lombardo and Dana Cimilluca
Activist investor Elliott Management Corp. is urging Duke Energy
Corp. to consider separating into three companies, in what would be
a major transformation of one of the nation's biggest
Elliott is seeking board seats at Duke and wants the company to
form a strategic-review committee that would explore the
possibility of a tax-free separation of the utility into three
companies, it said in a letter to Duke's board that it released
Monday. The three companies would be based on the three major
geographies it serves: the Carolinas, Florida and parts of the
The Wall Street Journal reported on Elliott's plans earlier
Monday after previously reporting that Elliott had a stake in Duke
and was agitating for change. Elliott told Duke in the letter that
it is one of its 10-largest shareholders, which would put the stake
above $900 million.
Charlotte, N.C.-based Duke, which has a market value of around
$65 billion, provides electricity to nearly eight million customers
in six states including the Carolinas, some Midwestern states and
Florida. It distributes natural gas to 1.6 million customers in
Ohio, Kentucky, Tennessee and the Carolinas.
Elliott said in the letter that the company's noncontiguous
profile puts a "conglomerate discount" on Duke's shares, which it
estimated to be a difference of at least $12 billion. It also
argued that Duke's customers would be better served by locally
Duke has previously cited its progress over the past year,
including settling rate cases and coal ash litigation and
accelerating its clean-energy efforts.
In recent months, Moody's Investors Service and others have
lowered Duke's long-term debt rating, partly in response to the
recent settlement of litigation concerning the cleanup of ash from
the company's coal-fired plants.
NextEra Energy Inc., the largest public utility in the U.S.,
made a takeover approach to Duke that was rebuffed. It subsequently
made another approach about a deal for just Duke Energy Florida,
the Journal has reported.
Elliott, which has more than $40 billion under management, has a
long record of investing in power and utility companies. It
previously targeted companies including Evergy Inc. and Sempra
Write to Cara Lombardo at firstname.lastname@example.org and Dana
Cimilluca at email@example.com
(END) Dow Jones Newswires
May 17, 2021 12:41 ET (16:41 GMT)
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