News Summary
Duke Energy has announced the sale of its Piedmont Natural Gas operations in Tennessee to Spire Inc. for $2.48 billion. This strategic move is aimed at enhancing Duke Energy’s financial standing and supporting its $83 billion capital modernization plan. Spire Inc. will acquire 3,800 miles of infrastructure and expand its customer base significantly, although the sale awaits regulatory approval. The transaction is viewed as a pivotal step for both companies in navigating the evolving energy market.
Tennessee
Duke Energy has announced plans to sell its Piedmont Natural Gas Tennessee operations to Spire Inc. for $2.48 billion in cash. This transaction is part of Duke Energy’s broader strategy to enhance its financial standing and fund significant investments in energy modernization.
The sale price reflects a 1.8x multiple of the projected 2024 year-end rate base and a 24x multiple of anticipated 2024 earnings. A significant portion of the sale proceeds, approximately $800 million, will be allocated to offset debt at Piedmont Natural Gas, thereby helping to maintain its capital structure. Duke Energy also expects to utilize existing tax credits to shield most of the cash taxes associated with the sale.
The remaining $1.5 billion of the transaction proceeds will play a critical role in funding Duke Energyโs ambitious $83 billion five-year capital plan, which is designed to modernize energy infrastructure amidst rising customer demand and economic growth. Duke’s president emphasized that this transaction is crucial for supporting investment opportunities that align with customer growth in the utilities sector.
Details of the Acquisition
With this acquisition, Spire Inc. will take over nearly 3,800 miles of distribution and transmission pipelines, along with a liquefied natural gas facility servicing approximately 205,000 customers in the Greater Nashville area. The transfer of operations is set to maintain job continuity, as Piedmont Natural Gas employees supporting the Tennessee business will be integrated into Spire Inc.’s workforce.
Spireโs goal is to expand its utility customer base to nearly two million homes and businesses through this venture. The acquisition, however, remains subject to regulatory approval from the Tennessee Public Utility Commission, with an expected closure date in the first quarter of 2026.
Context and Impact
This strategic move comes at a time when Duke Energy is actively seeking ways to strengthen its financial framework and invest in future growth. The sale is viewed as a method to adjust its capital allocation, ensuring financial health while advancing its modernization efforts in a rapidly evolving energy landscape.
For Spire Inc., this acquisition represents a significant expansion of its operations in the Tennessee market. The company has underscored its commitment to safety and community service, suggesting that it aims to uphold and enhance the service standards customers have come to expect from Piedmont Natural Gas.
Financial advisors to Duke Energy for this transaction included JP Morgan Securities LLC and RBC Capital Markets LLC, while legal advisors handled the deal through several firms including Skadden, Arps, Slate, Meagher & Flom LLP, McGuireWoods, and Holland & Knight.
This acquisition marks a pivotal moment for both Duke Energy and Spire Inc., positioning them strategically in the energy sector as they navigate the financial and operational challenges posed by evolving market conditions.
Deeper Dive: News & Info About This Topic
- Duke Energy News Release
- Wikipedia: Natural Gas
- Chemanalyst News
- Google Search: Spire Inc. Tennessee
- Tennessean Article
- Encyclopedia Britannica: Energy
- Clarksville Now Article
- Google News: Tennessee Economy
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