Canadian pipeline operator Enbridge to buy Spectra Energy for $28 bn in stock

07 Sep 2016


Canadian pipeline operator Enbridge Inc. yesterday struck a deal to buy Houston-based Spectra Energy Corp. in a $28-billion all-stock deal.

Under the deal, which is expected to close in the first quarter of 2017, Spectra Energy shareholders will receive shares of Enbridge valued at around $40.33 each, or a premium of about 11.5 per cent, based on Spectra's Friday closing price.

The transaction values Spectra's common stock at about $28 billion.

Post closing, Enbridge shareholders will own about 57 per cent of the combined company and Spectra's will own 43 per cent.

The combination is expected to achieve annual run-rate synergies of C$540 million ($415 million) by 2018, and around C$260 million in tax savings by 2019.

A successful transaction would make Enbridge North America's largest energy pipeline and storage company with a network of pipelines transporting oil, natural gas, and other liquids from the oil sands of Alberta, Canada, to the coasts of southern Florida.

The deal will also create a company with an enterprise value of around C$165 billion, and an inventory of current and potential growth projects worth C$74 billion ($57 billion).

Enbridge is a North American leader in delivering energy operating the world's longest crude oil and liquids transportation system across Canada and the US.

It owns and operates Canada's largest natural gas distribution company, serving residential, commercial, and industrial customers in Ontario, Quebec, New Brunswick and New York State.

Spectra, a Fortune 500 company, is one of North America's leading pipeline and midstream companies.

The company's operations in the US and Canada include approximately 21,000 miles of natural gas and crude oil pipelines; approximately 300 billion cubic feet of natural gas storage; 4.8 million barrels of crude oil storage; as well as natural gas gathering, processing, and local distribution operations.

"We are accomplishing that goal by combining with the premier natural gas infrastructure company to create a true North American and global energy infrastructure leader. This transaction is transformational for both companies and results in unmatched scale, diversity and financial flexibility with multiple platforms for organic growth," said, Al Monaco, president and CEO, Enbridge.

"The combination of Enbridge and Spectra Energy creates what we believe will be the best, most diversified energy infrastructure company in North America, if not the world. This is an incredible opportunity for both companies and we at Spectra Energy could not be more excited about what it means going forward," said, Greg Ebel, president and CEO of Spectra Energy, who will become chairman of Enbridge following the closing of the deal.

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