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A few months ago there was some crowing going on when Cincinnati's Federated bought Saint Louis' May. In another example of what goes around comes around, Cincinnati has lost Cinergy and 1,000 downtown jobs to Charlotte. In the world of business, don't ever get too excited about good news and don't get too upset about bad news. Because it all evens out in the end.

Merger sparks concerns

Loss of a corporate HQ 'never a good thing'

By John Byczkowski
Enquirer staff writer

Cincinnati-based Cinergy Corp. and Duke Energy of North Carolina unveiled a $9.1 billion merger Monday that would create a company with 5.4 million customers and more than $70 billion in assets but cost downtown a corporate headquarters and possibly jobs.

In the first hours after that news was announced, only two things were certain:

Cinergy CEO Jim Rogers, 57, will move to Charlotte, where Duke is based and assume the title of CEO of Duke Energy. James Anderson, 60, Duke's current CEO, will become chairman of the companies.

The name on the expanded convention center in downtown Cincinnati won't be Cinergy.

In 2003, Cinergy agreed to pay $9 million over five years for naming rights there.

With the Cinergy name going away, "we could call it CG&E, we could call it Duke," Rogers said Monday. "We haven't made a decision about that."

Rogers acknowledged, however, that people are blowing fuses over the possible negative impact the Duke-Cinergy deal would have on downtown and the region - the loss of a headquarters of a Fortune 500 company and potential loss of jobs.

And then there is likely to be ratepayer angst over whether buying electricity from a combined Duke/Cinergy would cost more. Cinergy has 1.5 million electricity customers in its Ohio/Kentucky/Indiana markets.

It has another 500,000 natural gas customers. The public should get to comment on the merger, which requires approval of federal officials and regulators in five states.

Cinergy has about 4,000 employees in Ohio and Kentucky. About 1,600 of them are downtown, with 1,000 in Cinergy's corporate headquarters and 600 at the headquarters of its local operating company, Cincinnati Gas & Electric. Its other operations include PSI Energy and Union Light, Heat and Power.

Cinergy owns its headquarters building at Fourth and Main streets, as well as the former Clopay Building at Fourth and Walnut. The company's executive offices are in leased space at the Atrium II downtown.

The deal - the second-largest U.S. utility acquisition in history - is not expected to close until July 2006. The stock swap would give 1.56 shares of Duke for each Cinergy share. Duke also would assume $5.4 billion in Cinergy debt.

The companies said they would cut $400 million in annual expenses through the merger, in part by trimming 1,500 jobs from a combined work force of more than 29,000. How many would come in Cincinnati? Rogers said he would move to Charlotte, but beyond that, specific jobs affected by the merger haven't been determined.

"It's too early to speculate on this," Rogers said. Some people would move from Cincinnati to Charlotte, but there are many decisions yet to be made. For instance, Duke owns several power plants in Ohio and elsewhere in the Midwest. It's possible the company would decide to manage those assets from Cincinnati.

"We haven't determined how we're going to operate the Midwest assets that they have, and that can lead to new jobs in Cincinnati," Rogers said. "I think it's too early to speculate about this, until we've done detailed work, looking at the organizations, looking at the processes, and then trying to make a determination how we move forward."

Whatever the decision, Rogers said, he would work hard to minimize layoffs - relying on attrition and retirements. "Over the last 16 years, I've been a CEO during good times and bad times and through a merger to create Cinergy," he said. "I've never laid anybody off during that period of time.

"The 1,500 (jobs) we're talking about represent a 5 percent reduction. We haven't determined where that's going to happen. We're going to look all across the operations, and I'm going to do my best. I'm not ruling out the possibility of layoffs; that wouldn't be prudent on my part," Rogers said. "But given my track record and given my belief in this, I'm going to work like hell to keep from laying people off."

Analysts said the deal benefits both companies. Duke gains access to Cinergy's coal-fired plants, and Cinergy gains capacity to generate power through Duke's vast network of facilities. Industry projections show the cost of electric power continuing to rise over the next few years, but the merger could mean prices may rise more slowly.

Cincinnati Mayor Charlie Luken called a news conference Monday and said the city will intervene in the approval process where it can, to ensure that local ratepayers aren't harmed by the deal.

"We must act to make sure ratepayers are protected," he said. Duke and Cinergy say the deal is good for shareholders, but "we must make sure that what's good for shareholders is not bad for consumers," the mayor said.

For downtown Cincinnati, it's hoped that the impact is minimal. About 10 percent of the class A office space in downtown Cincinnati is vacant. That level is considered relatively healthy, but it's certain to climb when Convergys Corp. moves from Sixth and Vine streets to Atrium I.

Bob Ryan, a commercial real estate broker with Collier Turley Martin Tucker in Cincinnati, said the space Cinergy occupies in Atrium II would likely be filled quickly - if Cinergy were to move its offices out. "That building is always in high demand," he said.

How that would affect downtown would depend on whether the tenant were new to downtown or just moved from another downtown building.

To say Cinergy's purchase is a negative for downtown, "that would purely be speculative," said David Ginsburg, president and CEO of Downtown Cincinnati Inc. But he pointed to two deals announced earlier this year - Procter & Gamble buying Gillette, and Federated Department Stores buying May Co. - that may bring jobs to downtown.

"We're starting to see some of the real value of that, with some of the advertising and graphic design and law firms expanding," he said.

Bill Schneller, with commercial real estate brokers CB Richard Ellis, said the market for office space right now is very active, with tenants looking for deals and investors looking to buy buildings. Losing a corporate headquarters "is never a good thing, but we do have a lot of really strong locally headquartered companies that aren't going anywhere. Hopefully it'll all come out for the good," he said.


http://news.enquirer.com/apps/pbcs.dll/article?AID=/20050510/BIZ01/505100331/1076/BIZ
 

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Because it all evens out in the end.

Nobody really cares. We gained three big acquisitions, lost one. I'll take the 3, thanks.
 

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ColDayMan said:
Because it all evens out in the end.

Nobody really cares. We gained three big acquisitions, lost one. I'll take the 3, thanks.
What were the three?
 

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Chiquita bought some salad company...Federated which has an 'honorary' headquarters in Cincinnati bought May Dept Stores and Proctor and Gamble bought Gillette .....

So really countering in the Cinergy buy out it is a 'net gain of 2'
 

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Hey, plus two ain't bad for a midwestern city. If you look at Fortune 1000 companies, and acquisitions or IPO's over $250 million, I doubt that there are too many cities in the midwest that are plus at all.
 

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Job wise under a scope CIncinnati isnt the prosperous paradise it may look like on paper, it still has more issues than anyplace I have ever seen this side of hell.
 

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SChristopher said:
You always say we, but arent you from Dayton living in Columbus?
I'm from Dayton AND Cincinnati (mother in Dayton; father in Cincinnati). And yes, I go to school in Columbus but I still go home to Cincinnati and/or Dayton.

Weren't you the one IMing me about moving to Tampa, Mr. Louisville?
 

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SChristopher said:
Job wise under a scope CIncinnati isnt the prosperous paradise it may look like on paper, it still has more issues than anyplace I have ever seen this side of hell.
Every place has "issues" and Cincinnati's are no exception. You just had a "rough time" in Cincinnati, thus you have a negative opinion which is skewered. Just like I've lived in Cincinnati and have are more realistic approach seeing how my experience was mixed (as with every place I've lived in).
 

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I never Imed you, but yeah I am set to move to Tampa, whats the difference?

I guess all I am saying is the corperate presence really didnt seem to make any difference in Cincinnati, it still is what it is, maybe I was a little harsh there really isnt much to it but great architecture, and yeah maybe that was skewed by the horrible time I had there, but I couldnt imagine having a better time unless I was hooting and drinking 40's on the street in OTR, perhaps that would have been fun.
 

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The difference is, I actually still have a residency in Cincinnati.

And yes, you IMed me a month or two ago. Otherwise, you are a flat-out liar in which it makes no logical sense that I knew you were moving to Tampa.
 

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LOL I guess I wouldhave had to, I remember saying it in passing in a thread thought maybe you had read it there...its really not a big deal, ill just bow out ... ;) Ohio threads and you and I dont mix *peaceful high five*
 

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Well, when I read...

Job wise under a scope CIncinnati isnt the prosperous paradise it may look like on paper, it still has more issues than anyplace I have ever seen this side of hell.

and

You always say we, but arent you from Dayton living in Columbus?

And you want me to act "nicely?" Uh huh. It has nothing to do with Ohio threads, Cincinnati business articles, or such. It just seems that you have a habit of initiating things when they are unnecessary (for example; in this thread, you started OFF with You always say we, but arent you from Dayton living in Columbus?).

I'm a peaceful person but God damn man, I think Cincinnati made you extremely bitter (much like montecarloss and St. Louis).
 

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^ Ah yeah those comments were pretty un neccesary I agree, I was just poking at you because I think somewhere deep in my subconcious its fun .... naw but yeah sorry.

And yes Cincinnati made me very bitter LOL.Not to say Louisville is any better I just have a house here.
 
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