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Duke Energy to buy Piedmont Natural Gas for $4.9 billion

A Duke Energy Corp. Coal Fired Power PlantA Duke Energy Corp. Coal Fired Power Plant
Emissions rise from stacks at the Duke Energy Corp. Gibson Station power plant in Owensville, Indiana, U.S., on Thursday, July 23, 2015.Photograph by Luke Sharrett — Bloomberg via Getty Images

Duke Energy has agreed to pay about $4.9 billion to acquire Piedmont Natural Gas, a deal that will add 1 million new customers to the energy company’s base.

Under the terms of the deal, Duke (DUK) agreed to pay $60 in cash for Piedmont (PNY), a 40% premium to Piedmont’s closing stock price on Friday. Duke will also assume about $1.8 billion in Piedmont debt in the deal, which is expected to close by the end of next year.

Of the two, Duke is far larger – serving 7.3 million retail electric customers across six states in the Southeast and Midwest. Revenue totaled $23.9 billion for Duke last year, while Piedmont’s revenue was $1.5 billion from the three states it serves.

Duke has bulked up through acquisitions in recent decades, merging with PanEnergy in 1997 and with Cinergy Corp. in 2006 – retaining the Duke name after both deals were completed. It later spun off its natural gas business to form Spectra Energy (SE) and also bought Progress Energy for $13.7 billion in 2012.

Duke and Piedmont are already partners in a strategic initiative: a $5 billion Atlantic Coast pipeline that will be the first major natural gas pipeline to serve Eastern North Carolina.