Duke Energy to buy Piedmont Natural Gas for $4.9 billion

Duke Energy Corp, the largest USA power company by generation capacity, said on Monday it would buy Piedmont Natural Gas Co for $4.9 billion in cash, helping expand its natural gas distribution business.

Duke Energy joins other power companies in the USA and Canada that are expanding their natural gas infrastructure amid weakening demand for electricity.

Under the terms of the pact, Piedmont shareholders will receive $60 a share, which represents a 40% premium from the stock’s closing price on October 23.

Duke has a pipeline play as well – its partnership with Dominion, Piedmont and AGL Resources on the Atlantic Coast Pipeline – but this acquisition would go beyond efforts to shore up production and delivery of natural gas for power generation, and put Duke squarely in the gas delivery business. Predictable, state-regulated profit from Piedmont’s fuel delivery will reduce Duke’s reliance on its global segment, Pourreza said. It will also maintain its headquarters in Charlotte, N.C.

“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. Duke spun off Spectra Energy, an operator of pipelines and liquefied natural gas facilities, after its merger with Cinergy in 2006. (EMA.TO) has agreed to buy USA electric and gas utility Teco Energy Inc.

Piedmont Natural Gas began operations in 1951 in Charlotte and Duke Energy was founded in the city in 1904.

The companies target to close by the end of 2016.

As it stands now, the deal will be completed depending on the approval by the North Carolina Utilities Commission, expiration or termination of any applicable waiting period as stated by the federal Hart-Scott-Rodino Antitrust Improvements Act of 1976, and Piedmont shareholder approval.

Duke said it will raise about $500-$750 million through newly issued equity to help finance the deal. Goldman Sachs & Co Piedmont and Kirkland & Ellis LLP is legal counsel. (GAS) in an all-cash deal valued at about $8 billion, or $12 billion, including debt.