Pipeline operators Enbridge Inc (TSE:ENB, Mkt cap 54.26B, P/E 39.21, Div/yield 0.53/3.79, EPS 1.43, Shares 934.23M) and Spectra Energy Corp (NYSE:SE) have agreed to merge in a deal valued at C$37bn (US$28bn).
Canadian company Enbridge said on Tuesday that the combination will create the largest energy infrastructure company in North America and one of the largest in the world, with a pro-forma enterprise value of around C$165bn (US$127bn).
That surpasses major industry players including Kinder Morgan, Energy Transfer Partners and Enterprise Products Partners, Forbes reported.
Al Monaco, president and CEO of Enbridge, said that the acquisition of Houston-based Spectra “is transformational for both companies and results in unmatched scale, diversity and financial flexibility with multiple platforms for organic growth.”
Bloomberg noted that the acquisition comes amid a wave of consolidation in the pipeline industry, after lower oil and natural gas prices reduced demand for shipments and as building new projects becomes increasingly difficult because of local opposition.
Under the terms of the deal, Spectra shareholders will receive 0.984 shares of the combined company for each share of common stock they own. The consideration is valued at US$40.33 per Spectra Energy share, based on the closing price of Enbridge common shares on September 2, 2016, representing a premium of about 11.5%.
Enbridge shareholders will own approximately 57% of the combined company, with Spectra shareholders owning approximately 43 percent. The combined company will be called Enbridge Inc.
Both companies’ boards of directors have approved the acquisition and it is expected to close in the first quarter of 2017, subject to shareholder approval and regulatory clearance.
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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