Under the terms of the deal, shareholders of Piedmont will receive $60 in cash for each share of Piedmont Natural Gas common stock.
Additionally, the utility will assume approximately $1.8bn existing net debt of Piedmont Natural Gas. This represents approximately $6.7bn of total enterprise value.
Piedmont Natural Gas chairman, president and CEO Tom Skains said: "The strategic combination of our two companies will deliver compelling value to our shareholders, greatly expand our platform for future growth, enhance our ability to provide excellence in customer service and give our employees more opportunities in one of the largest energy companies in the United States."
The acquisition is a part of Duke Energy’s effort to focus on adding gas assets which can offer reliable profit margins and better growth prospects, reported The Wall Street Journal.
Duke expects the acquisition to add one million gas customers in the Carolinas and Tennessee to its 500,000 existing gas customers in Ohio and Kentucky.
The two firms are key partners in the $5bn Atlantic Coast Pipeline, a 564-mile interstate natural gas transmission pipeline from West Virginia to North Carolina, US.
Dominion has 45% stake in the project while Duke Energy holds 40%, Piedmont has 10% and AGL Resources has 5%.
The project is designed to address the need for cleaner electricity generation as well as to meet growing natural gas demand.
Upon completion of the deal by the end of 2016, Duke Energy will have an increased stake of 50% in the pipeline project while Piedmont Natural Gas will be operated as a business unit of Duke Energy.
The transaction is subject to approval by the North Carolina Utilities Commission, expiration or termination of any applicable waiting period under the federal Hart-Scott-Rodino Antitrust Improvements Act of 1976, as well as shareholder approval from Piedmont.
Image: US plans to meet growing natural gas demand. Photo: courtesy of supakitmod/ FreeDigitalPhotos.net.
