JULY 2011 - Progress Energy agrees to settle merger-related suits by allowing shareholders to vote on the acquisition on August 23.
JANUARY 2011 - An investor in Progress Energy filed a lawsuit in state court against certain directors of Progress Energy for allegedly breaching their fiduciary duties arising out of their attempt to sell Progress Energy too cheaply via an unfair process to Duke Energy.

According to the class action complaint the plaintiff alleges on behalf of Progress Energy investors that the defendants failed to maximize shareholder value and the offer is fundamentally unfair to the public shareholders of Progress Energy.
On Monday, Jan. 10, 2011, Progress Energy, Inc. (NYSE: PGN) and Duke Energy (NYSE: DUK) had announced that both companies’ boards of directors have unanimously approved a merger agreement to combine the two companies in a stock-for-stock transaction. 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.

Shares of Progress Energy, Inc. (NYSE:PGN) closed the trading day before the announcement at $44.72 and fell on Monday in response to the announcement to $43.59 per share. Thus the transaction price represents only a modest premium of 3.9% to Progress Energy’s stock price the day prior to the announcement of the transaction. The plaintiff claims that the offered premium is significantly less than the average premium of 17% paid for U.S. electric utilities during the last two years and the members of Progreess Energy’s board agreed to the inadequate proposed transaction price while negotiating for continued employment protections, such as a windfall of $22million for the current Progress Energy board Chairman, President, and CEO if the transaction proceeds, who will also become President and CEO of the combined company along with 7 members of the 18 member board of the combined company, who will be selected by Progress Energy’s board.

Additionally the plaintiff alleges that the defendants failed to maximize shareholder value. Progress Energy, Inc. performed well in the past for its shareholders. Progress Energy’s 12months Total Revenue went from $8.7billion in 2006 to $9.8billion in 2009. Its Net Income rose from $551million in 2006 to $836million in 2009. For the first three quarters in 2010 Progress Energy reported a combined 9month Total Revenue of $7.869billion with a combined 9months Net Income of $731million.

Further the plaintiff alleges that the terms of the merger agreement create a number of improper obstacles discouraging Progress Board from even negotiation with another potential suitor. For example, the merger agreement provides a $400million termination fee and the board cannot even communicate with an alternative bidder unless it proposes to acquire 20% or more of Progress’ net revenues, income, or assets, or 20% or more of Progress stock, so the lawsuit.