Duke Energy to pay $4.9B for Piedmont Natural Gas

An existing member of Piedmont’s management team will lead Duke Energy’s natural gas operations in the Carolinas, Tennessee, Ohio and Kentucky. “This combination provides us with a growing natural gas platform, benefiting our customers, communities and investors”.

“This is an exciting moment for Piedmont Natural Gas, its shareholders, customers and employees”, Tom Skains, chairman, president and CEO of Piedmont Natural Gas, said in a statement. Furthermore, under the terms of the merger, Piedmont will still get to retain its name and operate as a business unit of Duke Energy.

“Everybody is buying these large utilities that will lend themselves to more infrastructure build-out”, he said.

Electric companies have balked at such rules, arguing that there is not enough pipeline infrastructure to support the increased need for natural gas. Natural gas ended Monday trading at $2.06 MMBtu, a price level last seen in 2012.

“Abundance of natural gas will become an increasingly important part of the energy mix as it shifts away from coal to continue”, Good said.

If weather fails to support demand, Natural gas price is likely to deteriorate to as low as $1.5-1.4/mmbtu.

Duke Energy has followed the electric utility companies before it, namely, Southern co, as well as Black Hills Corp and Emera Inc in acquiring distributors. On the flip side, the VelocityShares 3x Long Natural Gas ETN (UGAZ) has declined sharply. Moreover, Piedmont could also help provide needed growth opportunities according to Andrew Bischof, an analyst.

Regarding the deal, Barclays served as the financial adviser to Duke Energy, on the other hand, Goldman Sachs represented Piedmont.