Giant US power company Duke Energy said Monday that it would buy for $4.9 billion in cash natural gas distributor Piedmont Natural Gas, which is its partner in the $5 billion worth Atlantic Coast Pipeline venture.
According to USA Today the deal will give $60 in cash to Piedmont shareholders for each share they own. That amount is 40 percent premium to the last closing price of the natural gas firm. Charlotte, N.C., Piedmont went up significantly by 36.8 percent in pre-market trading.
Duke Energy President and CEO Lynn Good said they are looking forward to welcoming the employees of Piedmont, as well as the one million customers that mostly comes from Carolina and Tennessee.
Atlantic Coast pipeline transports gas from the Marcellus shale field in Pennsylvania to North Carolina and Virginia.
"This combination provides us with a growing natural gas platform, benefiting out customers, communities and investors," said Lynn.
US News reported that Piedmont will keep its name as well as its headquarters, which is located in Charlotte, North Carolina. Meanwhile, one of its directors will be part of Duke's board. Both the companies went to a unanimous agreement with the deal.
The deal with the two giant companies still need regulatory approval, and will close by the end of 2016. It is also expected to give information about the acquisition to the Public Service Commission of South Carolina, as well as the Tennessee Regulatory Authority.
The excess supplies of gas from shale fields keeps the pricing stable for natural gas distributors, which includes Piedmont. This encouraged US power producers to improve their natural gas infrastructure and depend less on power generation, especially when electricity is weakening thanks to better energy efficiency, according to CNBC.
Besides Duke Energy and Piedmont Natural Gas, US power producer Southern Co is planning to buy AGL resource on August for a price of $8 billion.
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