Two of North America’s largest energy infrastructure companies, Spectra Energy and Enbridge, are merging, creating North America’s largest energy infrastructure firm in a $28 billion deal. Upon completion of the Transaction, Enbridge shareholders are predictable to own about 57 percent of the combined firm and Spectra Energy shareholders are predictable to own about 43 percent. Based on the closing price of Enbridge common shares on Friday, that translates to US$40.33 per Spectra Energy share, representing about a 11.5-per-cent premium to Spectra Energy’s closing stock price Friday.
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“The strength of the combined company will support a large capital program to fund the continued development of Spectra Energy’s existing, preeminent project inventory”, Greg Ebel, Spectra’s president and CEO, said in the statement.
Enbridge’s biggest-ever deal comes as the company has been steadily expanding its North American pipeline network, which carries the bulk of Canadian crude oil to the United States.
Over the past five trading sessions shares of Chesapeake Energy Corporation (NYSE:CHK) are 5.59%; 39.06% for the month; 45.61% for the last quarter; 58.14% for the past six-months; and -6.46% for the last 12 months.
Enbridge Inc.is set to begin a merger with Spectra Energy Corp.
Its gas pipelines business unit centre will be in Houston, Texas, while Edmonton, Alberta will remain the business unit centre for liquids pipelines, with gas distribution continuing to be based in Ontario.
Enbridge Chief Executive Al Monaco will lead the combined company, which will have its headquarters in Calgary. The combined company will still be listed on the New York Stock Exchange.
Pipeline companies help transport oil, natural gas, and other liquids across the country.
A 15 percent annualized dividend increase is expected in 2017, the companies said.
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.
The takeover, the most significant energy deal since oil and natural gas prices crashed in mid-2014, highlights how pipeline companies are under pressure to merge as they grapple with overcapacity and sliding tariffs that have slowed dividend growth and unnerved investors.
Spectra Energy Partners, LP has a one-year low of $36.21 and a one-year high of $50.48 with a price-earnings ratio of 14. The Company’s U.S. Transmission business provides transmission storage and gathering of natural gas for customers in various regions of the northeastern and southeastern United States.
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Enbridge said it planned to divest about $2 billion of non-core assets over the next year to stay financially flexible.
