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Has anyone researched the Duke Energy spinoff of its natural gas operation on Jan. 2? Both DUK management and analysts are saying this will create additional value for both the gas operation, called Spectra Engergy, and the core utility.

"At Duke, A Powerful Idea by Jack Willoughby

Summary: Duke Energy's planned January spinoff of its natural-gas operations into Spectra Energy is 'turnaround wiz' Chairman Paul Anderson's brainchild. He hopes the split will bring "full value" for its underappreciated gas assets, including 17,500 miles of pipeline. The two businesses trade differently: (1) Gas companies trade for multiples of cash flow and electrics for multiples of earnings. (2) Gas concerns command richer valuations, in part because they make use of master limited partnerships which allow them to pass tax-free cash through to investors. (3) Spectra faces fewer regulatory hurdles than electric utilities, and expansion opportunities abound due to underinvestment in pipelines and storage, and rising demand. Duke shareholders are to receive one Spectra share for every two shares of Duke common, meaning they would get Spectra stock for $8 per share. Analysts believe it could trade for double. According to analyst Nathan Judge, Duke's assets are worth about $37 a share, 17% above the recent stock price of $31. Utilities analyst John Bartlett calls Duke, "an excellent way to capitalize on both the need for new energy infrastructure and the potential for a higher valuation as the market recognizes the strength of the underlying utility business."
Barron's bottom line: After the spinoff, Duke could trade for $23 and change; Spectra, for $16.45."

I've just begun to research this and it looks good. After the spin, the nat gas company plans to spin off some of its pipelines in a master limited partnership, creating eventually three companies from DUK.

Note: in the above article, I'm not sure how he got $8 for Spectra. If the spin is 1 share Spectra per 2 shares DUK, then Spectra would be worth about $11 at current DUK price.

Anyone out there have thoughts on this?
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