Canadian pipeline company Enbridge Inc. has agreed to buy Houston’s Spectra Energy Corp in a $28 billion deal. The acquisition will create a major North American energy-infrastructure company in a notable climate: the energy industry is dealing with the fallout from low oil prices. The joint company will be called Enbridge inc.
The deal, expected to close in the first quarter of 2017, was announced jointly by the firms. Spectra Energy shareholders will gain shares of Enbridge valued at around $40.33 each (or a premium of about 11.5 percent) based on the closing price of Enbridge shares on Friday.
The deal has the full support of both Spectra and Enbridge’s boards. On closing, Enbridge shareholders are predicted to own 57 percent of the resultant company. Spectra Energy shareholders will own the remaining 43 percent.
The merged company will have assets in crude oil, liquids and natural gas pipelines, terminal and midstream operations, a regulated utility portfolio and renewable power generation operations.
“Bringing Enbridge and Spectra Energy together makes strong strategic and financial sense, and the all-stock nature of the transaction provides shareholders of both companies with the opportunity to participate in the significant upside potential of the combined company,” said Enbridge chief executive, Al Monaco, quoted in the Wall Street Journal.
“Together, the merged company will have what we believe is the finest platform for serving customers in every region of North America and providing investors with the opportunity for superior shareholder returns,” added Spectra Energy Chief Executive Greg Ebel, who will become chairman of the merged company.
SOURCE: [Wall Street Journal]