(DUK) announced plans to buy Piedmont for $4.9 billion in cash.
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Piedmont will retain its name, operate as a business unit of Duke Energy and maintain its presence and headquarters in southeast Charlotte. Duke and Piedmont are partners in the $5 billion Atlantic Coast Pipeline.
The deal with give Piedmont shareholders $60 in cash for each of their shares, which represents a 40% premium to Piedmont’s last closing stock price.
The enterprise value of the deal comes in around $6.7 billion, which includes Piedmont’s $1.8 billion debt. Duke Energy was expected to gain one million natural gas customers in the deal.
The acquisition amounts to a doubling down by Duke Energy on the future of natural gas.
Piedmont chairman, president, and CEO, Tom Skains, in the press release, stated: “This is an exciting moment for Piedmont Natural Gas, its shareholders, customers and employees. This combination will provide us with a fast growing natural gas platform, which will benefit our customers, our investors and the community at large”.
Up to Friday’s close, Piedmont shares had risen almost 16 percent in the past 12 months, while Duke’s had fallen almost 8 percent.
Its subsidiaries are invested in joint venture, energy-related businesses, including unregulated retail natural gas marketing, regulated interstate natural gas transportation and storage, and regulated intrastate natural gas transportation businesses. The decision was unanimously approved by the boards of directors of both the companies. Both companies are based in Charlotte, North Carolina. As per the press release, Barclays has offered a fully underwritten bridge facility for the deal. Duke will finance the deal with a combination of debt, between $500 million and $750 million of newly issued equity and other cash sources.
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Piedmont has about 1 million customers in North and South Carolina and Tennessee. At about the same time, according to media accounts at the time, then Carolina Power & Light Co.in Raleigh bought North Carolina Natural Gas Corp.
