Duke Energy will merge with Progress Energy to form the US's largest utility at a transaction value of $26bn.
The combined entity, to be called Duke Energy, will have a combined enterprise value of $65bn and a market capitalisation of $37bn.
The new firm will provide services to 7.1 million electric customers in the six service territories of North Carolina, South Carolina, Florida, Indiana, Kentucky and Ohio.
Duke Energy will have a domestic generating capacity of 57GW from a diversified mix of coal, nuclear, natural gas, oil and renewable resources.
Duke Energy chairman, president and CEO Jim Rogers said the industry is entering a building phase where it must invest in new technologies to reduce its environmental footprints and become more efficient.
"Combining Duke Energy and Progress Energy creates a utility with greater financial strength and enhanced ability to meet our challenges head on," he said.
The combined firm will be headquartered in Charlotte with substantial operations in Raleigh.
Following necessary approvals, the firms will continue to operate as separate entities until the merger is complete.