Proposed Acquisition by Duke Energy Corporation

9 Months Ended

Jul. 31, 2016

Business Combinations [Abstract]

Proposed Acquisition by Duke Energy Corporation

Proposed Acquisition by Duke Energy Corporation

On October 24, 2015, we entered into an Agreement and Plan of Merger (Merger Agreement) with Duke Energy Corporation (Duke Energy) and Forest Subsidiary, Inc. (Merger Sub), a new wholly owned subsidiary of Duke Energy. The Merger Agreement provides for the merger of the Merger Sub with and into Piedmont, with Piedmont surviving as a wholly owned subsidiary of Duke Energy (the Acquisition). At the effective time of the Acquisition, subject to receipt of required regulatory approvals and meeting specified customary closing conditions, each share of Piedmont common stock issued and outstanding immediately prior to the closing will be converted automatically into the right to receive $60 in cash per share, without interest, less any applicable withholding taxes. Upon consummation of the Acquisition, Piedmont common stock will be delisted from the New York Stock Exchange (NYSE).

On December 22, 2015, the Federal Trade Commission granted early termination of the thirty-day waiting period for the Acquisition under the federal Hart-Scott-Rodino Antitrust Improvements Act of 1976. Expiration or termination of the waiting period is one of the conditions required for completion of the Acquisition.

For information on the January 15, 2016 filing with the North Carolina Utilities Commission (NCUC) for approval of the Acquisition, including the hearing on this matter in July 2016, see Note 3 to the condensed consolidated financial statements in this Form 10-Q. Also, on January 15, 2016, we and Duke Energy filed a joint application with the Tennessee Regulatory Authority (TRA) seeking approval to transfer Piedmont's Tennessee operating license effective at the closing of the Acquisition pursuant to state statue due to the change in control. In March 2016, the TRA approved the transfer contingent upon NCUC approval of the Acquisition.

At a specially called meeting held on January 22, 2016, the proposal to approve the Acquisition was approved by Piedmont's shareholders with a vote of 66.8% of Piedmont's outstanding shares of common stock entitled to vote. Piedmont's shareholder approval of the transaction is one of the conditions required for completion of the Acquisition.

In connection with this transaction, during the three months and nine months ended July 31, 2016, we recorded Acquisition and integration-related expenses of $.6 million and $2.6 million, respectively, for costs paid to outside parties, which are reflected in “Operations and maintenance” in “Operating Expenses” in the Condensed Consolidated Statements of Operations and Comprehensive Income. These amounts do not include the cost of company personnel participating in Acquisition-related integration planning activities. Also during the three months and nine months ended July 31, 2016, we recorded incremental share-based compensation expense of $.6 million and $6 million, respectively, from the accelerated vesting, payment and taxation of certain share-based awards for our President and Chief Executive Officer (CEO) and other eligible officers and participants with the issuance of restricted nonvested shares of our common stock in December 2015. These share-based plan costs are reflected in "Operations and maintenance" and related payroll taxes in "General taxes" in "Operating Expenses" in the Condensed Consolidated Statements of Operations and Comprehensive Income. For further information on these accelerated share-based transactions, see Note 12 to the condensed consolidated financial statements in this Form 10-Q.