The deal offers Piedmont investors $60 per share, a 40% premium on the company’s closing price on Friday, which has a few questioning the economics. To pay for the acquisition, Duke Energy will sell $500 million to $750 million of new stock as well as cash from other unnamed sources.
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It is invested in joint venture, energy-related businesses, including unregulated retail natural gas marketing, and regulated interstate natural gas storage and intrastate natural gas transportation. On October 26, 2015, the Company announced it had reached a definitive agreement for Duke to acquire all outstanding shares of PNY in a transaction valued at approximately $6.7 billion, inclusive of debt.
“Abundant, low-priced natural gas will become an increasingly important part of the nation’s energy mix as the shift away from coal continues”. More specifically, the statement said, the sale “enhances” the company’s expected earnings per share, boosting its growth rate from 4 percent to 6 percent.
Whether combining forces will help Duke and Piedmont’s effort to win approval for the Atlantic Coast Pipeline remains to be seen, however: The proposed project has encountered staunch opposition, drawing protests from residents along the proposed route and lawsuits from landowners who have refused to allow pipeline surveyors onto their property.
According to Charlotte Business Journal, Duke CEO Lynn Good told analysts that “We see opportunities with the establishment of the platform to expand capital deployment….”
Both companies unanimously approved the transaction, which is targeted to close by 2016’s end.
“The customers will notice no changes, there will be no impact on rates or bills for Duke or Piedmont customers … by state laws, utilities are regulated monopolies so they can’t charge what they want”, Scanzoni said.
As for the Duke-Piedmont deal, the two companies are already among several partners in the 550-mile-long Atlantic Coast pipeline, which carries gas south from the Marcellus shale basin in Pennsylvania. The companies will also provide information regarding the acquisition to the Public Service Commission of South Carolina and the Tennessee Regulatory Authority. An existing member of Piedmont management would lead Duke’s natural gas operations in the Carolinas, Tennessee, Ohio and Kentucky. “Once the filings are made, we will do a deep dive on all their numbers to make sure consumers are not harmed in this process”.
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Candy Bannister, an executive with the Upstate heating assistance program Sunbelt Human Advancement REsources, said Duke and Piedmont have always worked with her group to keep low income homes lighted and heated. Once the deal does close, Piedmont is expected to operate as a separate subsidiary of Duke Energy.
