Acquisitions |
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| Acquisitions | 2. ACQUISITIONS
Acquisition of Tennessee Piedmont Natural Gas business
On March 31, 2026, Spire completed the acquisition of the Tennessee natural gas distribution business of Piedmont Natural Gas Company, Inc., a wholly-owned subsidiary of Duke Energy Corporation (the “Piedmont Tennessee Transaction” or “Acquisition”). The Company expects the acquisition to significantly increase Spire’s scale of regulated business in one of the fastest growing regions in the U.S., expand regulatory diversity and provide accretive earnings and supports dividend growth. The consideration transferred at closing was approximately $2.5 billion in cash including working capital. The consideration transferred was allocated to the identifiable assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date.
The following table summarizes the preliminary purchase price allocation and the estimated fair values of the assets acquired and liabilities assumed as of March 31, 2026:
The consideration transferred is subject to customary post‑closing adjustments, including adjustments for net working capital, regulatory assets and liabilities, and capital expenditures through the closing date. Transaction costs of $23.1 and $25.0 associated with the acquisition were expensed as incurred and reported in “Operation and Maintenance Expense” in the Company’s condensed consolidated statements of income for the three months and six months ended March 31, 2026, respectively.
Substantially all of the assets acquired and liabilities assumed are subject to the regulatory authority of the TPUC and are accounted for in accordance with ASC 980, Regulated Operations. Because the costs associated with these regulated assets and liabilities are recoverable through regulated rates, their carrying values approximate fair value. Utility plant is depreciated using composite depreciation rates approved by the TPUC over the estimated service lives of the underlying assets.
Due to the timing of the Acquisition, the fair values of net assets acquired, including goodwill, have not been finalized and are therefore subject to change as additional information about the assets and liabilities existing as of the acquisition date is obtained during the measurement period. The preliminary fair value estimates are based on management’s best estimates and assumptions including future cash flows and discount rates where applicable and in accordance with ASC 980, Regulated Operations. These amounts are subject to change during the measurement period as additional information becomes available regarding facts and circumstances that exist at the acquisition date.
Goodwill represents the excess of the consideration transferred over the estimated fair value of the identifiable net assets acquired and is attributable primarily to expected operational synergies, complementary geographic and operational footprints, scale efficiencies, and future growth opportunities. The total amount of Goodwill is expected to be deductible for tax purposes. For book purposes, Goodwill is not amortized and is subject to annual impairment testing. Goodwill resulting from the acquisition was recorded at the parent company level and allocated to the Spire Tennessee reporting unit based on the expected benefit of the acquisition.
The acquisition was completed on March 31, 2026, the last day of the Company’s interim reporting period. Accordingly, the acquisition is reflected in the Company’s condensed consolidated balance sheets as of March 31, 2026, and the related cash outflows are reflected in the Company’s condensed consolidated statements of cash flows. As the acquisition closed on the period‑end date, the results of operations of the acquired business were not material and therefore are not included in the Company’s condensed consolidated statements of income or operating cash flows for the three months ended March 31, 2026. In connection with the Acquisition, Spire Tennessee and Duke Energy Business Services LLC (“Duke Energy Business Services”) have entered into a transition services agreement (“TSA”), pursuant to which Duke Energy Business Service has agreed to provide certain transition services to Spire to facilitate the transition of operations following the Acquisition, as agreed upon in the applicable purchase agreement. The TSA is for an initial eighteen month term and is subject to extension as necessary to complete the successful transition.
The following unaudited pro forma financial information reflects the consolidated results of operations of the Company assuming the acquisition had taken place on October 1, 2024. The most significant pro forma adjustments relate to:
Non-recurring pro forma adjustments include transactions costs and financing costs that are not expected to recur.
The acquisition was funded through a combination of debt issuances and borrowings, including (i) Spire financing activities consisting of the issuance of $900.0 of junior subordinated notes in November 2025 and borrowings of $800.0 under a senior unsecured term loan facility entered into on March 26, 2026 and fully drawn on March 31, 2026, and (ii) the issuance of $825.0 of senior unsecured notes through a private placement on March 31, 2026 pursuant to a master note purchase agreement dated December 2025 by Spire Tennessee. Additional information regarding financing activities related to the acquisition is provided in Note 8 – Financing. |
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