Enbridge will issue about 694 million new shares and take on about $22 billion of Spectra debt.
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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’s investors are expected to hold a combined stake of about 57% in the enlarged company upon completion, while those of Spectra Energy will own the rest of the shares.
Greg Ebel, President and Chief Executive Officer of Spectra Energy, who will become Chairman of Enbridge following the closing of the transaction.
Enbridge spokesman Michael Barnes said the deal will expand their network to include 19,000 miles of oil pipelines in North America and more than 100,000 miles of natural gas pipeline in the U.S. That values Spectra shares at US40.33, an 11.5 percent premium to the last closing, according to the companies.
Houston, TX-based Spectra Energy through its subsidiaries and equity affiliates, engages in the ownership and operation of a portfolio of complementary natural gas-related energy assets. ENB CEO Al Monaco will continue to lead the company.
The deal is expected to close in the first quarter of 2017.
“Enbridge before was very much more of an oily company and Spectra was a gassy company”.
Enbridge’s biggest-ever deal will consolidate its leading position next to US transport giants Kinder Morgan Inc and Plains All American Pipeline LP, which have seen their stock prices sink over the last two years as oil and gas producers slash spending on new wells.
On a conference call, Tuesday, Mr. Monaco said the deal will assist in diversifying Enbridge with a balance between natural gas and crude.
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Enbridge operates the world’s longest crude oil and liquids transportation system across Canada and the United States and has a growing involvement in natural gas gathering, transmission and midstream business, as well as an increasing involvement in power transmission. A CAN$37 billion deal will create a new integrated pipeline giant, with a combined value of US$127 billion. The companies’ assets are said to be well-positioned for growth on the liquids side, and especially on the gas side, where some projections suggest annual growth could surge 3% to 5%, driven by a number of factors. Spectra Energy said the 24-inch pipeline, which crossed the river about a mile east of the Interstate 30 bridge between Little Rock and North Little Rock, was damaged by river flooding.
