With Canada’s Enbridge (ENB) agreeing to acquire Spectra Energy (SE) in an all-stock deal valued at billion, this is a tantalizing moment for investors. Upon completion of the Transaction, Enbridge shareholders are expected to own about 57 percent of the combined company and Spectra Energy shareholders are expected to own about 43 percent.
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The deal will add Houston-based Spectra’s natural gas focused pipeline network to Enbridge’s pipelines for transporting crude oil.
“Bringing Enbridge and Spectra Energy together makes strong strategic and financial sense, and the all-stock nature of the transaction provides shareholders of both companies with the opportunity to participate in the significant upside potential of the combined company”.
He said more Canadian companies are also looking to the USA, both because of the size of the market and because of Canada’s increasing regulatory hurdles.
Enbridge Inc.is pushing deeper into natural gas shipping and distribution with its $37-billion acquisition of Spectra Energy Corp.
The two companies said they would “immediately establish an integration planning team composed of leaders from both management teams to prepare for and oversee the effective and timely integration of the businesses”.
Spectra shares rose $4.85, or 13 percent, to close Tuesday at $41.
The multibillion dollar merger will create the biggest energy-infrastructure group in North America, with an estimated enterprise value of $127bn.
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.
In a release, Enbridge said it will use each company’s “complementary and diversified asset base to increase customer service offerings”.
Spectra Energy also owns a 50% stake in MLP DCP Midstream Partners, so there is also buzz that eventually the MLPs, too, may be merged. The companies say they expect the merger to be completed in the first quarter of 2017.
Monaco will lead the combined company, which will be headquartered in Calgary.
Monaco, who will stay on as chief executive, pointed out the company will also have an inventory of growth projects to pursue: $26 billion in secured capital and another $48 billion of projects waiting in the wings for development.
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Monaco also highlighted that as a combined company, it could invest in natural gas pipeline projects across the United States and look at widening its scope to other sectors -such as offshore wind power generation. Enbridge said it would divest $2 billion of noncore assets over the next 12 months to improve its balance sheet.
