CHARLOTTE — Duke Energy Corp. says it will consider an activist investor’s proposal to spin off its Florida and Midwest utility franchises as separate companies in what is now an open battle over the company’s future.
Elliott Management sent a formal letter to the Duke board Monday calling for the addition of new directors and an immediate review of a separation of the company’s non-contiguous utilities.
Even before Elliott went public, it caused changes at Duke. It is clear now that Duke’s January plan to sell a 19.9% of Duke Energy Indiana for $2 billion was a response to Elliott’s push for more extreme changes at the company.
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The May 17 letter from Elliott Senior Portfolio Manager Jeff Rosenbaum and Managing Partner Jesse Cohn says Duke is underperforming and sells at a discount to its peers.
“We believe that a separation of Duke into the Carolinas, Florida, and the Midwest should create $12 (billion) to $15 billion of line-of-sight near-term value for shareholders,” they say.
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While Duke will consider the proposal, it notes this is just the latest in a series of proposals from hedge fund Elliott Management. Duke’s board of directors says it has “reviewed their (previous) proposals in depth and determined that they are not in the best interests of the company, its shareholders and other stakeholders.”
And the company disputes the premise of Elliott Management’s initiative.
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