Duke energy Corp. (NYSE:DUK) agreed to acquire Piedmont Natural Gas co. (NYSE: PNY) for $4.9 Billion in cash, adding roughly one million natural gas customers to the company.
Under the terms of the contact, shareholders of Piedmont will receive $60 a share in cash which represent 40% premium for piedmont’s closing price at October 23rd. In addition Duke will also assume 1.8 billion debt. According to Duke, it will finance the deal with debt, newly issued commercial paper between $500 million to $750 million, and other cash sources.
After the announcement of this acquisition on Monday, Piedmont’s stock price went sky high about 39% to its all-time high for almost $59 per share. On the other hand, Duke’s stock price dropped 2.5% to $72 per share.
This deal is expected to be closed by the end of 2016.
Duke Energy, headquartered in Charlotte, North Carolina, is the largest electric power holding company in the United States, with assets also in Canada and Latin America. After this acquisition with Piedmont Natural Gas, a national natural gas distributor serving over one million residential and industrial customers as well as 51,600 wholesale customers. Duke would increase their skate to 50% for Atlantic Coast Pipeline, a $5 billion natural-gas pipeline which Duke and piedmont are already partners with. Both companies say the Atlantic Coast Pipeline would be the first “major” one to serve eastern North Carolina.
When the deal is completed, Piedmont will operate as a business unit under Duke and keeps its name and headquarters. One of the board members of Piedmont will join Duke Board and a Piedmont executive would run Duke’s natural gas operation in Carolinas, Tennessee, Ohio and Kentucky.