The Company operates through five segments: Liquids Pipelines; Gas Distribution; Gas Pipelines, Processing and Energy Services; Sponsored Investments, and Corporate.
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“As Mexican utilities start to use more and more gas they’re going to reach further and further into the market, including up to the Utica and Marcellus”, Spectra CEO Gregory Ebel said on a conference call with analysts. Protesters disrupted hearings on a proposed TransCanada Corp. pipeline in Montreal last week. He added, “If you own one, that makes it that much more valuable”.
“Our desire here is all driven by the fundamentals of natural gas and the future”, Enbridge CEO Al Monaco said in an interview. 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. The pipeline failure in May 2015, sent 3.9 million cubic feet of natural gas into the Arkansas River.
These include the 14,595-kilometre Texas Eastern Transmission system that supplies markets in the northeastern USA from the Gulf Coast region, as well as smaller conduits such as the Maritimes & Northeast Pipeline system, which transports gas from Atlantic Canada to the eastern U.S.
According to reports, Spectra Energy was briefly interested in buying Tulsa-based Williams Cos. a year ago after the Williams board rejected an all-stock offer from Energy Transfer Equity but before it accepted a revised cash and stock proposal.
Enbridge Inc.is set to begin a merger with Spectra Energy Corp. “I think people will feel quite nervous about them”.
Spectra shares rose $4.85, or 13 percent, to close Tuesday at $41. It would have CAN$26 billion worth of projects now underway and CAN$48 billion of projects planned from 2019 onwards. The headquarters will be in Calgary, where Enbridge is based. Their customer base is largely low risk, the companies said, with 93 percent of customers holding investment grade or equivalent ratings. The combined companies will have about $46 billion in debt. “For us, strategically it’s a check for us to move forward in the gas business”. Based on the closing price of Enbridge common shares on Friday, that translates to US$40.33 per Spectra Energy share, representing about a 11.5-per-cent premium to Spectra Energy’s closing stock price Friday. The deal will likely be closed by the first quarter of 2017.
Lever said the resistance companies across Canada and the US have faced in building new resource projects like pipelines has forced companies to look to mergers and acquisitions for growth.
Under the terms of the all-stock deal, Spectra shareholders will get 0.984 shares of the combined company for each share held. Over the next 12 months, Enbridge said it expects to divest about $2 billion of noncore assets.
As a result of the merger, the Financial Times has reported: “Enbridge shareholders [would get] 57% and Spectra shareholders 43% of the merged group”.
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Information for this article was contributed by Jessica Seaman of the Arkansas Democrat-Gazette.
