Enbridge Energy Partners, LP (NYSE:EEP) in a press release today announced that it would acquire the Houston-based natural gas infrastructure company, Spectra Energy Corp. Once that happens, Enbridge’s shareholders will own almost 57% of the combined company, and Spectra Energy shareholders will own about 43%.
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“After the transaction closes, Enbridge Inc. and Union Gas will continue to operate as separate companies”, says Stass.
On a combined basis for the 12 months ended June 30, 2016, the new Enbridge would have had revenues of over CAD 40 billion and earnings before interest and tax (EBIT) of CAD 5.8 billion.
The $37 billion all-stock deal would have Enbridge buy Spectra Energy which has a 50 per cent share in Westcoast Connector Gas Transmission, a natural gas pipeline which would feed a planned liquefied natural gas (LNG) plant near Prince Rupert. Spectra President and CEO, Greg Ebel, would become the Chairman of the merged firm.
Canada’s main stock index dipped on Tuesday as losses for the financial and industrial groups offset gains for mining stocks, while news of an acquisition boosted shares of the country’s largest pipeline company. It is the general partner of Spectra Energy Partners LP, owner of the natural gas and crude oil assets in Spectra Energy’s US portfolio.
The valuation is based on the closing price of Calgary-based Enbridge’s common shares on September 2.
The deal brings much greater diversity to the two infrastructure companies, said AltaCorp Capital analyst Dirk Lever.
Enbridge said the combined company’s $57 billion organic growth platform is expected to support a “highly visible” dividend growth rate of 10 to 12 percent through 2024. In the deal, Spectra Energy Holders will receive Enbridge shares valued at approximately $40.33 each.
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 Energy Corp is a natural gas infrastructure company.
Mr. Monaco earlier this year, mentioned that his company was seeking to invest in natural-gas and renewable-energy projects to rebalance its profits away from oil over the long run and invest in openings derived from the global shift to a lower-carbon economy. Enbridge Income Fund Holdings would remain a publicly traded corporation headquartered in Calgary.
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Spectra Energy owns the natural-gas pipeline that burst in the Arkansas River past year. Enbridge will have multiple, cost-effective funding sources and be even more competitive in capturing opportunities.
