Canadian pipeline company Enbridge Inc. said it plans to acquire Spectra Energy Corp. for $28 billion, creating North America’s largest energy infrastructure company.
Advertisement
According to Zacks Investment Research, “SPECTRA ENERGY PERTNERS LP is a growth oriented, DE master limited partnership recently formed by Spectra Energy Corp, headquartered in Houston, Texas, to own and operate natural gas transportation and storage assets”. The Company operates the crude oil and liquids transportation system in Canada and the United States.
Stock-Callers.com has issued research reports on the following equities: Williams Partners L.P., Enbridge Energy Partners L.P., Frank’s global N.V., and Magellan Midstream Partners L.P. These stocks belong in the oil and gas pipelines segment which is composed of contractors involved in the construction of oil and gas pipelines, mains, pumping stations, refineries and storage tanks. The deal “adds diversity” to both companies and “extends the runway of double-digit dividend growth for ENB shareholders through 2024”, Thummel said.
He said companies are also looking to merge for cost savings. The tribe has filed a lawsuit against the U.S. Army Corps of Engineers for approving the pipeline crossing the Missouri River upstream from the tribe’s reservation.
Spectra Energy Corp. stated a price of 41.92 today, indicating a positive change of 2.24%. Despite having risen some 50 percent since January on a partial recovery in oil and gas prices, Spectra’s shares are still down 16 percent from a high of $43 hit in July 2014.
The stock-for-stock deal values Spectra common at roughly $28 billion, based on the closing price of Enbridge’s common shares on September 2, Kallanish Energy calculates.
Under terms of the deal, Spectra Energy shareholders would receive 0.984 shares of the combined company for each share of Spectra Energy common stock they own.
Spectra shareholders will get $40.33 per share in the all-stock agreement, representing a premium of 12 percent to the September 2 closing price, according to a company statement Tuesday. Enbridge put up $1.5 billion for its 37% share of the 1,168-mile, $3.78 billion pipeline, which is to run from North Dakota to terminals in IL.
The combined company, called Enbridge Inc., will be based in Calgary. Greg Ebel, Spectra’s CEO, will be non-executive chairman. “For close to a century, Spectra Energy and its predecessor companies have developed critically important pipelines and related infrastructure connecting natural gas supply sources to premium markets”.
But now more deals are starting to get done.
Enbridge’s biggest-ever accord will consolidate its leading position next to US transport giants Kinder Morgan Inc.
In March, TransCanada Corp. agreed to buy Columbia Pipeline Group Inc. for $10.2 billion.
For Enbridge, creating new pipelines is becoming increasingly hard from the perspective of acquiring the necessary regulatory approvals as well as mounting construction costs.
Credit Suisse Securities (Canada) and RBC Capital Markets were Enbridge’s financial advisers, while Sullivan & Cromwell LLP and McCarthy Tétrault LLP were its legal advisers.
Advertisement
Samson Capital Management Llc holds 6.38% of its portfolio in Spectra Energy Partners, LP for 160,427 shares. Skadden, Arps, Slate, Meagher & Flom LLP advised Spectra on tax issues. The deal will likely be closed by the first quarter of 2017.
