Duke Energy announced it will spend about $4.9 billion in cash to acquire Piedmont Natural Gas, a deal which would give Piedmont shareholders $60 in cash for each share they possess, representing a 40 percent premium to Piedmont's last closing stock price.

The companies are key partners in the $5 billion Atlantic Coast Pipeline that will be the first major natural gas pipeline to serve Eastern North Carolina, according to ABC News.

Shares of Piedmont Natural Gas Co. soared almost 40 percent before the opening bell and appears to be heading toward an all-time high.

"We look forward to welcoming Piedmont's employees and one million customers in the Carolinas and Tennessee to Duke Energy," said Lynn Good, president and CEO of Duke Energy, according to USA Today. "This combination provides us with a growing natural gas platform, benefiting our customers, communities and investors." 

Piedmont started its operations in 1951 in Charlotte. Duke Energy was founded in the city in 1904. Piedmont will keep its name and maintain its headquarters in Charlotte, and one of its directors will join Duke's board. It will become a unit of Duke Energy.

Both companies unanimously approved the transaction, which is targeted to close by 2016's end, reported Bloomberg. However, completion of the transaction relies on the approval of the North Carolina Utilities Commission and Piedmont shareholders. The companies will also provide information regarding the acquisition to the Public Service Commission of South Carolina and the Tennessee Regulatory Authority.

The energy company will also assume approximately $1.8 billion in Piedmont debt, representing a total enterprise value of approximately $6.7 billion.

Duke said it will finance the transaction with a combination of debt, between $500 million and $750 million of newly issued equity and other cash sources.