Reuters BreakingViews Chris Swann writes: Leadership is supposed to have its
privileges. So naming the chief executive was a prize electric firm Progress
Energy demanded when selling itself to larger rival Duke Energy. In return they
accepted a tiny premium. That Progress’ man Bill Johnson lasted only hours in
his job is a reminder to investors never to sacrifice value for the prestige of
getting the top job.
When Jim Rogers, Duke Energy’s veteran CEO, consummated his
takeover of Progress in January 2010 he joked with analysts about arm-wrestling
his successor as leader of the combined company. He noted that Johnson, a
powerfully built former Penn State football player, was likely to win any such
battle of strength. When it came to the power struggle, however, Rogers lost no
time in slamming his rival.
This was an unequal match. After the merger Duke, whose
shareholders owned 63 percent of the new firm, controlled 11 of the board’s 18
board seats. Former Progress directors understandably feel aggrieved at this
unexpected act of aggression. One, John Mullin, described it as “one of the
greatest corporate hijackings in U.S. business history.” At the time the
Progress board accepted a tiny 4 percent takeover premium, modest even by the
standards of the electric sector. The
ousting of Johnson is hard to explain in anything other than Machiavellian
terms…..
http://blogs.reuters.com/breakingviews/2012/07/06/duke-ceo-sucker-punch-a-value-lesson-for-investors
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