Canadian pipeline company Enbridge Inc. has agreed to buy Houston’s Spectra Energy Corp in a $28 billion deal.
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Enbridge, Canada’s biggest pipeline operator, said it would hand Houston-based Spectra shareholders 0.984 shares of the combined company for each Spectra share.
Shareholders of Enbridge (TSX:ENB) would own about 57 per cent of the combined company and the rest would be owned by Spectra shareholders.
The combined company will operate under the name Enbridge Inc and will be headquartered in Calgary, Alberta. The deal values Spectra Energy’s common stock at around CAD 37 billion, based on Enbridge’s closing on September 2, 2016. Get twice-daily updates on what the St. Louis business community is talking about.
The value of the combined entity is pegged at $165-billion.
Spectra shares closed Friday at US$36.15 before the Labour Day holiday weekend. Greg Ebel, Spectra’s CEO, will be non-executive chairman.
“We are accomplishing that goal by combining with the premier natural gas infrastructure company to create Atrue North American and global Energyinfrastructure leader”.
Spectra’s shares have risen about 51 percent since the start of the year, handily outperforming its peers in the Dow Jones U.S. Pipelines index even as low crude prices continued to drag on the North American oil and gas industry.
ENBRIDGE may eventually be stymied in its attempt to build an oil-carrying pipeline through northern B.C.to the coast but if a massive deal announced today goes through, it will still have a stake in the region’s potential energy future.
BMO Capital Markets and Citi were Spectra Energy’s financial advisers and Wachtell, Lipton, Rosen & Katz and Goodmans LLP its legal advisers.
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It also expects the deal will lead to a 15% annualized dividend increase next year and annual 10% to 12% percent dividend growth after that through 2024.
