By PETER LATTMAN July 6, 2012, 7:34 am
A former board member involved in a merger that created the nation’s largest electric utility has blasted an abrupt leadership change at the company.
“This is the most blatant example of corporate deceit that I have witnessed during a long career on Wall Street,” said John H. Mullin III, the former lead director of Progress Energy, which completed its combination with Duke Energy this week.
On Monday, Duke closed its merger with Progress, a $32 billion deal, including debt, originally struck a year and a half ago. William D. Johnson, the head of Progress, was to become chief executive of the combined company, according to the terms of the merger agreement.
But in a news release announcing the deal’s completion, Duke’s newly formed board put the Duke chief executive, James Rogers, in the top spot and said that Mr. Johnson had resigned “by mutual agreement.”
The news of Mr. Johnson’s ouster sent shock waves through the energy industry. Since Tuesday, when the deal was announced, a growing chorus of dissent has condemned the last-minute move, including Mr. Mullin, who did not join the merged companies’ board.
“As a noncontinuing director of the combined company,” Mr. Mullin said in a letter to The New York Times, “I now, along with similarly situated former directors of Progress, find myself without a constituency and without an ability to mount a challenge to what I believe is one of the greatest corporate hijackings in U.S. business history.”
Alfred C. Tollison Jr., another former Progress director who did not join the new Duke board, said: “I was surprised, shocked, and I felt misled. I did not expect this from Duke Energy and am really disappointed with how this turned out.”
The credit ratings agency Standard & Poor’s has warned that it may cut the ratings of Duke, which is based in Charlotte, N.C., because of the surprise switch.
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