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What: Shares of utility Duke Energy Corp jumped 10% in June, according to data provided by S&P Global Market Intelligence, as the company moves closer and closer to acquiring Piedmont Natural Gas' business for $4.9 billion.
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So what: The North Carolina Public Staff reached an agreement in June to approve Duke's acquisition of Piedmont. Among the stipulations were a reduction in Piedmont's North Carolina customers' bills of $10 million, spread over two years, to account for synergies between the two companies. Duke Energy will also make annual charitable contributions of $17.5 million in North Carolina in the first four years after the deal.
These are small prices to pay for the acquisition of natural gas infrastructure that serves 655,000 customers in the state.
Now what: Duke Energy's biggest goal in acquiring Piedmont is to diversify its business away from the electric utility business, which has become higher risk in recent years. Customer demand isn't growing, and new energy sources like rooftop solar are encroaching on the monopoly electric business. So, buying natural gas assets gives the company the diversification it needs, along with strong cash flow in a growing business and a bigger presence on the East Coast.
The article Why Duke Energy Corp's Shares Popped 10% in June originally appeared on Fool.com.
Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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