Did Duke agree to merge with PGN at the closing price on Friday. They put an actual price on what the merger was going to cost them, so I'm believing they did. So if for some reason the price of PGN goes down by the merger date do we still get the over $46 merger price?
If you go back the past couple of years, you will see that this is all spam and repeated canned messages from the same sender with several ID's. It's just game playing. The same poster rates his own messages using a different ID. This happens on a lot on these public boards and can't be stopped. Just ignore it. A lot of new posters coming online don't realize this.
Whatever dividends you are getting now from DUK you will be getting after the merger.
If you get $100 now, you'll get $100 later. The dividend % does not increase or decrease.
However, if they do a reverse split, the amount of dividend per share will be adjusted accordingly.
If they do a 1:2 split, the dividend will be 1.95/share (2*.975).
Here is my interpretation of what the PGN Shareholders will receive from DUK/PGN Merger Agreement....
Right from the DUK Release, as indicated below, PGN Shareholders will receive 2.6125 shares of Common
Stock of Duke Energy in Exchange for Each Share of Progress Energy Common Stock.
The above Exchange Ratio of 2.6125 was determined and Agreed to by both Company`s Management and was based on Dukes Energy`s Closing Share Price on Friday Jan. 7, 2011 which Pegged the above Fixed Exchange Ratio of 2.6125 shares of DUK for Each Share of PGN. The future daily price swings of both stocks do not in any way affect the Fixed Exchange Ratio in my opinion.
The above [ Fixed ] Exchange Ratio was determined on Friday`s [ 1/7/11 ] Closing Price as follows:
Progress Energy Closed @ 46.476
Divide PGN`s Price by DUK`s.= 2.6125
Duke Energy Closed @ 17.790
Therefore, in my opinion, upon the ultimate completion of the Merger, the Progress Energy Shareholders will receive 2.6125 Shares of Duke Energy for each share of Progress Energy Shares held.
Example....If you currently hold 2,000 shares of PGN you will receive 2,000 shs X 2.6125 or 5,225 shares of Duke Energy in my opinion. Naturally this would change if management proceeds with a Reverse Stock Split prior to the Merger Date, as they have indicated.
Under the merger agreement, Progress Energy’s shareholders will receive 2.6125 shares of common stock of Duke Energy in exchange for each share of Progress Energy common stock. Based on Duke Energy’s closing share price on Jan. 7, 2011, Progress Energy shareholders would receive a value of $46.48 per share, or $13.7 billion in total equity value. "
Feel free to comment or correct what I have indicated above.
This is also my understanding. But, based on the fact that this is a total stock deal the current price of PGN should be 45.88 considering the price of DUK. The thing that troubles me about this deal is the comparitive P/E's of the stocks. Also, why doesn't this seem to need shareholder approval? As a PGN shareholder, I feel I am being under paid based on the before announcement price.
You are correct so far. Unfortunately if the price of Duke Energy stock declines to $10 per share when the deal is closed we will receive $26.125 per share for our PGN stock. There are no guarantees what the share price of Duk will be when the merger is consummated.
I think you are right on the money (no pun intended).
Frankly, if you are a long term holder in PGN, I see this as a non event. You'll still get a similar dividend, a company whose stock price won't change much (affected slightly by economic conditions), and the stability of a large multi-billion dollar company that the government would never allow total failure (i.e. compare to large banks and the automobile industry).
The dividend checks just come from a different company and will usually provide a return that is close to the inflation rate. It is decent holding for us retired people.
Our stock will go down because we are merging into a company that does not earn enough to pay their dividend. We pay out far too much but at least there is some money left in retained earnings to pay for the unexpected. I think this may go badly for us down the line.
You can not judge the deal's effect on stock price yet for PGN. Today PGN went down, but was the first day ex-dividend - a time it usually drops.
DUK goes ex dividend in about 3 weeks. DUK price could go up 1-3 days before their ex-date as people roll in to scalp the dividend payment.
We need a few days to see just how much PGN shareholders hate the prospect of the DUK takeover and how enthused they are to give DUK the company for cheap, with no consideration of another offer such as Dominion.
I hope someone smarter than me can answer the question. If it is a stock for stock and mgmt agreed to a certain number of shares of Duke then we get that. It was priced at the $46+ number on Fri. Can someone else comment?
At the time that the deal is officially completed, you would receive in stock: 2.6125 X DUK share value
For example, if DUK share value when the deal is compelted is @ $18: 2.6125 X 18 = $47.025