Enbridge to buy Spectra Energy in stock deal worth $37B

Combination of the two pipeline companies would create a North American energy infrastructure giant

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CALGARY — Enbridge Inc. (TSX:ENB) plans to buy Houston-based Spectra Energy Corp. for stock worth $37 billion in a friendly deal that would create a North American energy infrastructure giant headquartered in Calgary.

The combined company’s natural gas pipelines business would be based in Houston and its liquids pipelines business would be based in Edmonton. The Enbridge natural gas distribution business to consumers would remain based in Ontario.

Enbridge’s Al Monaco would remain president and chief executive officer of the enlarged company and Spectra’s CEO, Greg Ebel, would become chairman of the Enbridge board of directors after the deal gets necessary approvals.

“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,” Ebel said in a joint statement by the companies.

Monaco said that the deal makes strong strategic and financial sense and the all-stock nature of the deal provides shareholders with the opportunity to participate in future growth.

“This transaction is transformational for both companies and results in unmatched scale, diversity and financial flexibility with multiple platforms for organic growth,” Monaco said.

The companies say they expect to achieve operational savings worth about $540 million on an annualized basis, most of it achieved in the latter part of 2018. They also expect an additional $260 million of tax savings beginning in 2019.

They expect the combined company will pay higher dividends, including a 15 per cent increase on current levels in 2017 after the deal closes.

Spectra shares closed Friday at US$36.15 before the Labour Day holiday weekend. In premarket trading after Tuesday’s announcement, they were up US$2.37 or about six per cent.

Based on the Sept. 2 stock price, Enbridge values its offer at US$40.33 per Spectra share.


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