Meanwhile, EOG Resources said it will buy oil and natural gas company Yates Petroleum for about $2.3 billion, mostly in stock.
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Founded: Spectra was formed in 2007 as a spin-off from Duke Energy, but traces its roots to 1911 and the Niagara Falls, Ont. -based Union Gas Company of Canada. Shareholders of Houson-based Spectra will receive.984 shares of the combined company for each share of Spectra common stock they own. Spectra Energy President and Chief Executive Officer Greg Ebel will become the non-executive chairman of Enbridge’s board of directors when the deal closes, the companies announced.
The combined company will be called Enbridge Inc. and keep its current headquarters in Calgary, Alberta. Shares of Spectra Energy Corp. rose $4.76, or 13.5 percent, to $40.91. The largest-ever foreign purchase by a Canadian company, the combination will create the biggest energy pipeline and storage operator in North America. The all-stock deal will create the largest pipeline and infrastructure company in North America, and the two companies said that they anticipated a 15% annualized dividend increase in 2017 following the merger. ENB will add SNB’s wide-moat natural gas pipeline network to existing oil and gas infrastructure, opening up new business lines that position the company for sustainable organic growth in new areas.
“The proposed merger of Enbridge and Spectra Energy, two fossil fuel pipeline giants that already control much of the oil and gas flow throughout the country, would be bad news for energy consumers and awful news for the clean energy revolution on which the future of our planet depends”, she said.
Spectra shareholders will own about 43 percent of the new company while Enbridge shareholders will own about 57 percent. Enbridge and Spectra will also have a utility portfolio and midstream energy business after they combine. Enbridge said it would divest $2 billion of noncore assets over the next 12 months to improve its balance sheet.
Stass adds the move actually helps join Union Gas with a strong base of operations in Enbridge.
Despite lots of talk about an M&A wave, only a handful of energy acquisitions have happened since oil and gas prices entered their worst slump in a generation as buyers and sellers have been unable to agree on prices.
But now more deals are starting to get done.
Fortis, headquartered in St. John’s, N.L., announces it’s buying independent USA transmission utility ITC Holding Corp. for US$11.3 billion.
In March, TransCanada Corp. agreed to buy Columbia Pipeline Group Inc. for US$10.2 billion. It also won an auction for Astake in EnBW’s Hohe See, AEuropean offshore wind power project, according to Asource familiar with the matter.
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BMO Capital Markets and Citi were SpectraEnergy’s financial advisers and Wachtell, Lipton, Rosen & Katz and Goodmans LLP its legal advisers. Earlier this year, Energy Transfer Equity terminated its merger agreement with rival Williams Cos., in a deal that was worth $33 billion when it was first struck.
