Tennessee to See Changes in Natural Gas Services

Tennessee to See Changes in Natural Gas Services

Spire Inc. has announced a major acquisition involving Piedmont Natural Gas, a subsidiary of Duke Energy, with a focus on its operations located in Tennessee. This acquisition, valued at $2.48 billion on a cash-free and debt-free basis, promises to enhance not only Spire’s operational capacity but also its financial performance.

Piedmont Natural Gas currently serves over 200,000 customers in the Nashville area, making it a significant player in the local natural gas distribution market. The deal represents a purchase price that is 1.5 times the estimated rate base for 2026, signifying strong potential for future growth and stability in revenue generation.

With the successful completion of this acquisition, Spire anticipates a boost in adjusted earnings per share (EPS), projected to support long-term growth of 5-7%. This transaction is scheduled to close in the first quarter of 2026, subject to necessary approvals from the Tennessee Public Utility Commission, along with a review under the Hart-Scott-Rodino Antitrust Improvements Act.

Operational Expansion and Customer Focus

Once the acquisition is finalized, customers in the Nashville area will be served by Spire’s newly formed business unit, known as Spire Tennessee. This integration is expected to strengthen Spire’s regulated business scale, as the company will enhance its infrastructure, adding nearly 3,800 miles of distribution and transmission pipelines to its existing network. This expansion signifies Spire’s commitment to increasing its utility footprint, which already includes operations in Missouri, Alabama, and Mississippi.

The CEO of Spire highlighted that the company’s values align closely with those of Duke Energy, particularly in terms of safety and community support. On the other side, Duke Energy’s leadership has expressed confidence that Spire will effectively continue the growth trajectory and operational success of the Tennessee natural gas business, thereby ensuring continued reliable service to customers.

Financial Strategy and Future Outlook

To finance this acquisition, Spire plans to utilize a combination of a bridge facility from BMO Capital Markets Corp., alongside a mix of debt, equity, and hybrid securities. Furthermore, Spire is exploring the possibility of selling non-utility assets to aid in funding this significant purchase. This strategic move reflects Spire’s thoughtful planning in balancing growth with financial stability.

In light of this acquisition, Spire intends to keep investors informed and engaged through scheduled conference call and webcasts, which will outline the strategic implications of this deal. Currently, Spire provides natural gas services to approximately 1.7 million homes and businesses across the United States, positioning itself as one of the largest publicly traded natural gas companies in the market.

Duke Energy’s Strategic Shift

Duke Energy’s decision to sell its Tennessee operations aligns with a broader strategic initiative to fund an ambitious $83 billion capital plan focused on energy modernization efforts. This plan aims to enhance service efficiency, particularly in response to record customer growth and the demands posed by ongoing economic development pipelines.

As the sectors of energy and natural gas continue to evolve, the Spire and Piedmont transaction illustrates the competitive landscape and the strategic moves various companies are making to adapt to a changing market. With these developments, both Spire and Duke Energy are taking significant steps toward ensuring future success and efficiency in natural gas delivery systems.