This deal values Spectra Energy’s common stock at approximately $28bn, based on the closing price of Enbridge’s common shares on 2 September.
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The combined company will be called Enbridge Inc. and will count on an asset base made up of “a diverse set of best-in-class assets comprised of crude oil, liquids and natural gas pipelines, terminal and midstream operations, a regulated utility portfolio and renewable power generation”, the companies explained. (WMB) amid a stubborn two-year energy rout, while Kinder Morgan (KMI) has moved to simplify its structure.
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. If the deal goes through, it will create an energy infrastructure company with the largest pipeline network and storage facilities of natural gas within North America. After the deal is completed, Enbridge shareholders are expected to have ownership of about 57% of the combined entity while the rest will be owned by Spectra Energy shareholders.
In an all-stock deal valued at $28 billion, the Canadian company said it teamed up with Spectra, which counts about 21,000 miles of oil and natural gas pipelines in North America. “We ship, we pick up, we store product”, said Ebel, who will become nonexecutive chairman at Enbridge.
Shares of Enbridge were rising 5.98% to $43.44 this afternoon.
The combination of these two companies is expected to create a new energy infrastructure company in North America, to be known as Enbridge, which will have an enterprise value of approximately C$165bn ($127bn). That diversifies Enbridge, which also like TransCanada, is getting some pushback on an oil pipeline from the oil sands in Alberta to Canada’s east coast.
That premium was small compared to the 32.4-percent premium Energy Transfer offered for Williams Companies Inc in a 2015 deal that ultimately failed. Enbridge said it expects to divest about $2 billion in noncore assets over the next 12 months “to provide additional financial flexibility”.
Enbridge Chief Executive Al Monaco will lead the combined company, which will have its headquarters in Calgary.
Monaco would continue to serve as president and CEO.
Enbridge’s Board hired Credit Suisse Securities (Canada), Inc.as lead financial advisor along with RBC Capital Markets.
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The Transaction is expected to close in the first quarter of 2017 subject to the receipt of both companies’ shareholder approvals, along with certain regulatory and government approvals.
