Elliott Demands Corporate Split at Duke Energy

Photo by WSJ (DOUGLAS R. CLIFFORD / TAMPA BAY TIMES / ZUMA PRESS)

[Asia Economy Reporter Yujin Cho] U.S. activist hedge fund Elliott Management has demanded the corporate breakup of Duke Energy, the largest power supplier in the U.S., the Wall Street Journal (WSJ) reported on the 17th (local time).

In a letter sent to the Duke Energy board, Elliott requested the formation of a strategic review committee to examine the feasibility of splitting the company into three based on service territories.

Elliott stated that it is one of the top ten major shareholders holding $900 million worth of Duke Energy stock and also demanded multiple board seats.

In response, Duke Energy said it would review Elliott’s proposal. However, the board reportedly believes that the breakup is not in the best interest of the company, shareholders, or other stakeholders, as it could lead to changes in capital structure and credit issues, as well as increased costs.

Duke Energy, listed on the New York Stock Exchange (NYSE), has seen its stock price rise about 23% over the past year.

Headquartered in Charlotte, North Carolina, Duke Energy currently supplies electricity to 8 million customers across six Midwestern states and provides natural gas to 1.6 million customers in Ohio, Kentucky, Tennessee, South Carolina, and North Carolina.

Previously, Duke Energy rejected an acquisition offer from NextEra Energy, the largest utility company in the U.S.

Elliott, led by Carl Icahn, known as a "corporate raider," is an activist fund managing over $40 billion and actively intervenes in the management of companies in which it holds stakes.