Spire to acquire Duke Energy’s Tennessee natural gas business for $2.48b

Published 29/07/2025, 12:08
Spire to acquire Duke Energy’s Tennessee natural gas business for $2.48b

ST. LOUIS - Spire Inc. (NYSE:SR), a $4.5 billion market cap utility company with a strong dividend track record spanning 55 consecutive years, announced Tuesday it has agreed to acquire Piedmont Natural Gas’s Tennessee operations from Duke Energy (NYSE:DUK) for $2.48 billion on a cash-free, debt-free basis. According to InvestingPro data, Spire currently trades slightly above its Fair Value, with analysts setting price targets between $78 and $85.

The transaction will add more than 200,000 customers in the Nashville area to Spire’s portfolio, expanding the company’s regulated utility footprint beyond its current operations in Missouri, Alabama and Mississippi. The acquired business will operate as Spire Tennessee after the deal closes. With this expansion, Spire continues to build on its stable business model, which has supported 21 consecutive years of dividend increases and maintains a current dividend yield of 4.15%.

The purchase price represents 1.5 times the estimated rate base in 2026, according to the company’s press release statement. Spire expects the acquisition to be accretive to adjusted earnings per share and support its long-term growth target of 5-7%.

"This acquisition is a natural fit for Spire, allowing us to expand our core utility business and increase our utility customer base to nearly two million homes and businesses," said Scott Doyle, president and chief executive officer of Spire.

The Piedmont Natural Gas Tennessee business includes nearly 3,800 miles of distribution and transmission pipelines serving the Nashville metropolitan area, one of the fastest-growing regions in the United States.

Spire will finance the transaction through a mix of debt, equity and hybrid securities. The company is also considering the sale of non-utility assets, such as natural gas storage facilities, as a potential funding source. BMO Capital Markets provided a fully committed bridge facility for the entire purchase price. InvestingPro analysis indicates Spire currently operates with a debt-to-equity ratio of 1.46 and receives a "Fair" overall financial health score, factors that investors should consider when evaluating this significant acquisition. For detailed insights into Spire’s financial position and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

The transaction is expected to close in the first quarter of 2026, subject to approval from the Tennessee Public Utility Commission, Hart-Scott-Rodino review, and other customary closing conditions. With Spire’s EBITDA currently at $807.3 million and a relatively low beta of 0.64, the company appears positioned to maintain its stability through this transformative acquisition.

In other recent news, Spire Inc. reported its Q2 2025 earnings, revealing adjusted earnings per share of $3.60, which fell short of the forecasted $3.65. Revenue also did not meet expectations, totaling $1.05 billion compared to the anticipated $1.23 billion. Additionally, Duke Energy announced an agreement to sell its Piedmont Natural Gas Tennessee local distribution company to Spire for $2.48 billion in cash, a transaction expected to close in the first quarter of 2026 pending regulatory approvals. Spire has also filed a new shelf registration statement with the SEC for its "at-the-market" equity offering program, allowing for the issuance and sale of up to $123,613,839 in shares. Stifel has raised its price target for Spire to $81 from $69, while maintaining a Hold rating, based on 2026 estimates and adjustments to Spire’s midstream and marketing segments. These developments highlight recent strategic and financial activities at Spire Inc.

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