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...at a 40% premium!

"The all-cash deal works out to $60 per share for Piedmont (NYSE:PNY), about a 40% premium to Friday's $42.21 close. Duke (NYSE:DUK) will also assume roughly $1.8B in PNY existing net debt, bringing the total enterprise value to $6.7B."

http://seekingalpha.com/news/2854916-duke-energy-buying-pied...


Wish I owned this one! ;-)

Cheers!
Murph
Home Fool
(long DUK)
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Presumably PNY shares will get a big boost today, and our analysts will advise us on whether to sell now, or wait for the buyout. I used to own DUK, but sold out when they seemed to mess up a previous takeover.

Doogy (long PNY)
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Congrats, Doogy! The 40% premium will serve you well.

David
II Home Fool
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Hi Doogy!

IMHO, you are on the right side of this deal because I think DUK is overpaying for this one. So either they know something that we can't see in the published financials, or they are empire building......or maybe it's a bet on the long-term price of NG?

Cheers!
Murph
Home Fool
(mystified by the size of the premium)
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Murph and Doogy--

DUK is buying PNY at a price significantly above James' valuation estimate of $36.50.

I think DUK is desparate to acquire natural gas and related distribution assets. Coal has been demonized (and perhaps rightly so since efforts to create "clean coal" have failed) and can't compete with natural gas. Similarly, nuclear power cannot compete with the price of natural gas. And natural gas-burning power plants are cheaper to build than nuclear power plants.

So, DUK is going all in with natural gas. But you're right, Murph, DUK is overpaying for PNY. That's a shame for us DUK shareholders, but great for PNY shareholders.

David
II Home Fool
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Oops, I misspelled "desperate".

David
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Maybe I should sell now at the market before they have a reality check and change their mind.

Doogy
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Do what you think is best.

Fwiw, I generally sell shortly after a deal like this is announced. The way I look at it is the +36% gain you have right now is a sure thing, if you sell. Do I really want to risk that for just another 4% given that if something goes wrong I lose that 36% and maybe more?

Course, if someone else decides to pony up more than Duke, then you'd be out that fly-in-the-sky possibility too.

I like sure things.

Another way to think about it is, like Cramer says, "Bulls make money, bears make money, pigs get slaughtered."

Not that I'm a big fan of Cramer but there is some wisdom in the things he says sometimes.

Rich
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Morningstar's take:

Duke Energy Seeks Pricey Growth in Piedmont Acquisition

We see strong strategic rationale in the Duke/Piedmont tie up but the benefits are coming at a steep cost.


http://news.morningstar.com/articlenet/article.aspx?id=71949...

David
II Home Fool
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M*'s take is right on target, IMHO.

Cheers!
Murph
Home Fool
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