Duke Energy outbid second suitor for Piedmont Natural Gas

Duke Energy outbid a second, unidentified suitor to buy Piedmont Natural Gas last month, securities filings showed Monday.

Charlotte-based Piedmont outlined in the filings a fast-moving acquisition that began with a telephone call over the summer from Duke chief executive Lynn Good.

The companies announced the $4.9 billion deal, in which Duke will assume $1.8 billion in Piedmont debt, on Oct. 26. Duke said the acquisition would allow it to expand its investments in natural gas at a time when it is becoming the fuel of choice for electric utilities.

Good and her Piedmont counterpart, Thomas Skains, arranged a Sept. 3 meeting, according to a preliminary proxy statement Piedmont filed Monday.

On Aug. 24, apparently after Good’s initial contact, Atlanta-based Southern Co. announced it would buy natural gas company AGL Resources for $8 billion.

Piedmont executives viewed the Southern-AGL purchase as a “potential catalyst” for other such mergers between electric utilities and natural gas companies, the filing says.

On Aug. 28, a second suitor – the chief executive of unnamed “Party A” – called Skains to ask about a potential deal.

At their Sept. 3 meeting, Good made Duke’s acquisition offer. At a second meeting on Sept. 9, Duke said it would offer $53 to $56 a share for Piedmont’s stock.

The following day, Party A offered Piedmont a stock premium of 30 percent to 35 percent, worth $47.25 to $49 a share at that time.

Piedmont’s board instructed senior executives to pursue both offers, and set a deadline of noon on Oct. 27 to receive final bids. It later moved the deadline to Oct. 22 amid mounting market speculation that a deal was in the works.

Piedmont’s senior managers, meanwhile, expressed concern over the acquisition terms offered by Party A. Among them were provisions that affected deal certainty, regulatory approvals and Piedmont’s fiduciary duties, the filing said.

When the final bids came in, Duke offered $60 a share – a 42 percent premium on Piedmont’s closing stock price a day earlier. Party A offered $57 a share.

Piedmont’s board agreed to negotiate Duke’s offer “in light of the higher price being proposed by Duke Energy and the limited material issues of concern in the merger agreement,” the filing said.

Piedmont’s board voted its final approval the night of Oct. 24. Shareholders will vote at a special meeting, its date not yet set, in 2016.

Skains announced this month that he would retire when the Duke acquisition closed in late 2016.

This story was originally published November 23, 2015 at 3:31 PM with the headline "Duke Energy outbid second suitor for Piedmont Natural Gas."