Enbridge Inc (TSE:ENB, Mkt cap 51.74B, P/E 27.41, Div/yield 0.58/4.19, EPS 2.03, Shares 943.11M) will pay about US$170m to take private Midcoast Energy Partners LP (MEP), the Calgary-based pipeline company said on Friday.
MEP has a stake in the natural gas gathering and processing business owned by Enbridge Energy Partners LP (EEP).
According to MEP, Enbridge will acquire all of its outstanding publicly-held common units for US$8.00 per unit — a 5.5% premium to the trailing 30 trading-day volume weighted average price of MEP common units as of January 26, 2017.
John Whelen, executive vice president and chief financial officer of Enbridge, commented: "We believe it is in the interest of all shareholders that these assets be held privately within the Enbridge family of companies at this time. Eliminating a publicly traded vehicle also reduces costs and simplifies our corporate structure."
The transaction is expected to close in the second quarter of 2017.
Meanwhile, a strategic review of EEP is ongoing and is expected to continue through the second quarter.
Whelen said that "EEP has highlighted certain initial joint funding actions with Enbridge and further actions under consideration as part of the strategic review. The initial actions announced today and any further actions that may be undertaken in connection with the EEP review are not expected to be material to Enbridge's previously published financial projections. Enbridge is not planning a buy-in of EEP at this time. It is expected that EEP will remain as a publicly traded limited partnership and not be combined with any other entity in connection with the strategic review."
Enbridge pledged to continue working closely with EEP on the strategic review.
Whelen concluded: "While EEP's gas gathering and processing has been impacted by the prolonged commodity downturn, its core liquids pipeline business on the whole is performing very well and in line with our expectations, financially and operationally. In particular, Enbridge's Mainline performance remains at record levels. Both Enbridge shareholders and EEP unitholders will continue to derive value from these unique and critical infrastructure assets in the near-term and in the years to come."
Enbridge Inc (TSE:ENB) is a Calgary-based energy transportation and distribution company. The Company operates in five segments: Liquids Pipelines; Gas Distribution; Gas Pipelines, Processing and Energy Services; Sponsored Investments, and Corporate. Liquids Pipelines segment owns and operates crude oil and other liquid hydrocarbons pipelines and terminals. Gas Distribution consists of the Company's natural gas utility operations. Gas Pipelines, Processing and Energy Services segment consists of investments in natural gas pipelines, gathering and processing facilities and the Company's energy services businesses, along with renewable energy and transmission facilities. Sponsored Investments includes the Company's 33.7% economic interest in Enbridge Energy Partners, L.P. (EEP), and Enbridge's interests in both the Eastern Access and Lakehead System Mainline expansion projects held through Enbridge Energy, Limited Partnership (EELP). The Corporate segment includes an investment in Noverco Inc. More from Reuters »
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