Duke Energy Corp. , the third-largest U.S. power company, is near a deal to buy rival Progress Energy Inc. for more than $13 billion, according to sources familiar with the matter.
The stock-based deal would come at a low premium to Progress' $13.1 billion market value, one source said.
The companies hope to announce the deal Monday, according to another source, but the talks could still be delayed or even derailed.
Both electricity generating companies are based in North Carolina and serve clients in North and South Carolina. Duke serves some markets in the Midwestern United States and Progress also supplies customers in Florida.
If the deal is completed, Duke would be adding Progress' more than 22,000 megawatts of generation capacity to its fleet of power plants, which has a capacity of 35,000 megawatts. One megawatt can power an average of 1,000 U.S homes.
Duke last year lost out on a bid for the U.S. assets of German utility E.ON but its chief executive, Jim Rogers, an industry veteran who has led various utilities in the past 21 years, has widely been seen as hungry to make acquisitions. Duke bought rival Cinergy for $9 billion in 2006, bringing Rogers onboard, who was then serving as CEO of the smaller company.
The U.S. power industry has seen a resurgence of deal activity in the past year, including FirstEnergy's $4.7 billion deal for Allegheny Energy, E.ON's $6.7 billion sale of its U.S. unit to PPL Corp and Carl Icahn's recent bid to buy power producer Dynegy.
But tough requirements from U.S. state regulators, who often oppose large mergers on fears that prices could rise and services could decline, could stymie consolidation in the utility sector. State regulators have sought drastic concessions in the past in the form of rate reductions from companies planning to merge.
In a previous wave of consolidation that took place during the middle of the last decade, planned mergers of FPL Group and Constellation Energy Group, as well as Exelon and Public Service Enterprise Group fell apart after regulatory problems arose.
Duke and Progress were not immediately available for a comment.