Piedmont Natural Gas Company, Inc. Sells Tennessee Business for \$2.48 Billion: Key Financial Implications for Investors

Piedmont Natural Gas Company, Inc. (“PNG”), a subsidiary of Duke Energy, has announced the completion of a major transaction that could have a significant impact on its financial standing and potentially influence its share value. On March 31, 2026, PNG finalized the sale of its Piedmont Tennessee business (“PNG TN”) to Spire, Inc. for \$2.48 billion in cash, subject to closing adjustments.

Key Highlights of the Transaction

• Transaction Size: Sale of PNG TN for \$2.48 billion in cash proceeds, with customary closing adjustments.
• Completion Date: The sale was completed on March 31, 2026.
• Significant Financial Event: This transaction is considered significant for the company and is reflected in its unaudited pro forma financial statements for FY2025.
• Accounting Treatment: The transaction does not qualify as a discontinued operation since it is not deemed a strategic shift with a major effect on the company’s overall operations or financial results.

Pro Forma Financial Impact

The unaudited pro forma consolidated financial statements have been prepared to illustrate the impact of the transaction as if it had occurred on January 1, 2025 (for the statement of operations) and December 31, 2025 (for the balance sheet). Key adjustments and impacts include:

• Operating Revenues: PNG’s historical 2025 revenues were \$2,237 million. After removing PNG TN’s results and related adjustments, pro forma revenues would have been \$1,911 million.
• Operating Expenses: Total operating expenses were reduced from \$1,541 million to \$1,351 million, reflecting the removal of PNG TN’s costs and \$13 million of other transaction-related costs reclassified to offset the gain on sale.
• Gain on Sale: PNG expects to recognize an estimated gain of \$693 million from the transaction. This gain is calculated based on the \$2.48 billion consideration, less the net assets sold (\$1.74 billion) and estimated transaction costs (\$50 million). The actual gain may vary, subject to post-closing adjustments.
• Net Income: Pro forma net income for 2025 would have been \$887 million, up from a historical \$440 million, driven mainly by the gain on sale and lower interest expense.
• Interest Expense Reduction: The company used \$800 million of the proceeds to repay debt, resulting in a \$22 million reduction in annual interest expense.
• Cash Position: The sale substantially boosts the company’s cash and cash equivalents to \$1,334 million as of December 31, 2025, after repayment of debt and estimated tax payments.
• Retained Earnings: Retained earnings are projected to increase by \$522 million due to the gain on sale, net of tax and other adjustments.
• Tax Effects: The company accrued estimated current and deferred tax expense related to the gain, with an effective tax rate of 24% applied to the adjustments.

Important Considerations for Shareholders

• One-Time Gain: The transaction yields a significant one-time gain, materially increasing 2025 net income and equity.
• Debt Reduction: The company’s balance sheet is substantially strengthened by debt paydown and increased liquidity.
• Not a Strategic Shift: The disposal does not represent a strategic shift for PNG, so its core operations and business direction remain largely unchanged.
• Potential for Adjustments: The final gain and cash proceeds are subject to customary post-closing adjustments, and the actual figures may vary from the estimates.
• Non-Recurring Costs: The company incurred \$37 million in non-recurring transaction costs, including advisory and professional fees, with \$13 million incurred prior to December 31, 2025, and the remainder accrued after that date.
• Corporate Allocations: There is a \$37 million adjustment to payables for corporate governance and shared services related to the transaction.

Potential Price-Sensitive Information

This transaction is likely to be price-sensitive for investors because it delivers a large one-time gain, strengthens the company’s financial position, and reduces debt, potentially supporting a higher share price and improved credit profile. However, as the transaction does not represent a strategic shift, it does not alter the company’s long-term business model.

Summary Table of Key Pro Forma Financials (FY2025)

Conclusion

The divestiture of the Piedmont Tennessee business marks a significant financial event for Piedmont Natural Gas Company, Inc., with a substantial boost to earnings and liquidity, and a notable reduction in debt. While the transaction does not represent a strategic transformation, the financial improvements and one-time gain are likely to attract investor attention and could impact the share price in the near term.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should review the company’s official filings and consult with financial professionals before making investment decisions. Actual results may differ due to post-closing adjustments and other future developments.

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