NEW YORK (The Deal) -- After a peer pulled a sale of a like business, Duke Energy's (DUK - Get Report) process to sell its generation business in the Midwest is going "strong" and is on track for an announcement after Labor Day, said sources familiar with the matter.
If the sale goes through, it could reach a valuation of between $2 billion and $2.3 billion, according to industry bankers.
Industry participants started to question whether Charlotte, N.C.-based Duke would be successful with its merchant generation sale following Arlington, Va.-based AES' (AES) announcement on July 14 that it was pulling the sale of subsidiary DPL Inc.'s generation and retail businesses, a similar business to Duke's. That business had been expected to garner $1.5 billion to $2 billion in a sale.
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A spokesman at Duke said the process is continuing and the company does not have any firm dates at this time. Duke advisers Morgan Stanley and Citigroup Inc. either declined to comment or did not return calls.
Read More: 4 Stocks Warren Buffett Is Selling in 2014 Regarding Duke's sale, The Deal previously reported that Dynegy, the Blackstone Group LP, Riverstone Holdings LLC, Energy Investors Funds and Energy Capital Partners were all interested in the power plants. Duke operates the electric power plants in a separate division from its utility business in Cincinnati and Northern Kentucky. Midwest commercial generation sells electricity generated by its power plants to the PJM Interconnection. The Midwest power plant portfolio's revenues represent 3% to 5% of the utility's total earnings. Duke prefers the regulated model and since these assets are unregulated, the company has been trying to sell the assets. Duke, with a $50 billion market capitalization, supplies energy to 7.2 million electric customers and 500,000 gas customers and has 57,500 megawatts of generating capacity. Duke is among a number of companies trying to reduce their exposure to the competitive power markets through merchant power plant divestitures. Ameren Corp. closed on the sale of its merchant business, Ameren Energy Resources Co. LLC, to Dynegy Inc. in December 2013. Dynegy did not pay cash for the business, but assumed $825 million in existing debt.
--Claire Poole contributed to this report