Duke Energy set to acquire Piedmont Natural Gas for $4.9 billion

The boards of Duke Energy and Piedmont Natural Gas have both approved a definitive agreement for Duke Energy to acquire Piedmont for approximately $4.9 billion in cash.

Piedmont Natural Gas began operations in 1951 in Charlotte, North Carolina, and Duke Energy was founded in the city in 1904. Both companies have helped to support economic development in the Carolinas and to establish the Charlotte region as a major hub for energy companies.

Duke Energy and Piedmont also are key partners in the $5 billion Atlantic Coast Pipeline that will be the first major natural gas pipeline to serve Eastern North Carolina.

Upon transaction closing, Piedmont shareholders will receive $60 in cash for each share of Piedmont Natural Gas common stock. This represents an approximate 40% premium to Piedmont's Oct. 23 closing stock price. Duke Energy will also assume approximately $1.8 billion in Piedmont Natural Gas existing net debt, representing a total enterprise value of approximately $6.7 billion.

A fully underwritten bridge facility is in place with Barclays to complete the transaction. Duke Energy will finance the transaction with a combination of debt, between $500 million and $750 million of newly issued equity and other cash sources.

Piedmont Natural Gas will retain its name, operate as a business unit of Duke Energy, and maintain its presence and its headquarters in southeast Charlotte. Duke Energy will add one member of Piedmont's board of directors to its board after the transaction is closed. An existing member of Piedmont's management team will lead Duke Energy's natural gas operations in the Carolinas, Tennessee, Ohio and Kentucky, and will report to Lynn Good, president and CEO of Duke Energy.

Completion of the transaction is conditioned upon approval by the North Carolina Utilities Commission, the expiration or termination of any applicable waiting period under the federal Hart-Scott-Rodino Antitrust Improvements Act of 1976, and Piedmont shareholder approval. The companies also will provide information regarding the acquisition to the Public Service Commission of South Carolina and the Tennessee Regulatory Authority.

The companies are targeting a closing by the end of 2016. The companies will continue to operate as separate entities until the transaction is completed.

Barclays served as the exclusive financial advisor to Duke Energy. Goldman Sachs & Co. served as the exclusive financial advisor to Piedmont Natural Gas. Sidley Austin LLP served as legal counsel to Duke Energy, and Kirkland & Ellis LLP served as legal counsel to Piedmont Natural Gas.

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