Duke Energy Corp has agreed to purchase Piedmont Natural Gas for cash in the amount of $4.9 billion.
Duke follows Southern Co. the owners of electric utilities, Black Hills Corp and Emera Inc, which acquired distributors of gas over the last 12 months.
The deal increases the stake of Duke in the Atlantic Coast Pipeline worth $5 billion to 50%. When it is completed, the line will tie gas fields of West Virginia to service areas of Duke in North Carolina.
Its opening the door for Duke into the business of gas infrastructure, said an analyst in the industry located in New York.
Piedmont shareholders are to receive cash of $60 for each share of common stock in Piedmont, about a premium of 40% of the closing price of October 23 the companies announced Monday in a prepared statement.
Duke is to assume net debt of Piedmonts of approximately $1.8 billion representing a value of the business of $6.7 billion.
Piedmont increased by 37% on Monday, it largest gain intraday and the highest price it has had since 1980.
The deal helps Duke’s forecast of per share earnings growth of 4% to 6%, said the company.
The rate base of Piedmont and earnings prior to taxes, interest, amortization and depreciations have been increasing annually by 9%, said CFO at Duke Steven Young.
State-regulated predictable profit from the fuel delivery at Piedmont will lower the reliance Duke has on its segment overseas, said an industry analyst.
Lynn Good the CEO at Duke said the combination provides the company with a platform of natural gas that is expanding, benefitting our clients, communities and our investors.
Duke anticipates that it will expand Piedmont’s system to supply different power plants as gas begins to displace coal as the leading source of generation, said the company.
Piedmont distributes as well as sells natural gas in Tennessee, North Carolina and South Carolina as well as through subsidiaries markets gas in Georgia, announced the company based in North Carolina.