- Enbridge and Spectra Energy this morning announced plans to merge in a stock-for-stock deal that values Spectra at $28 billion and will create the largest energy infrastructure company in North America, according to SNL.
- The deal, already approved by both companies' boards, will still need shareholder approval and will face regulatory scrutiny. The companies say they expect the merger to be completed in the first quarter of 2017.
- Once completed, the merger of the two oil and gas infrastructure companies would create a combined entity with an enterprise value of about $127 billion.
With natural gas prices low and the fuel still seen as an energy growth area, officials at Enbridge say their move to acquire Spectra makes perfect sense. A map of the combined companies' infrastructure shows the deal would expand Enbridge's reach in the Western Plains, Rocky Mountains, Appalachia, and the Northeast.
“Over the last two years, we’ve been focused on identifying opportunities that would extend and diversify our asset base and sources of growth beyond 2019,” Enbridge President and CEO Al Monaco said in a statement announcing the deal. “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. "
Monaco added the deal is "transformational for both companies." Upon completion of the deal, Enbridge shareholders are expected to own approximately 57% of the combined entity, and it will continue to operate under the Enbridge name.
Spectra President and CEO Greg Ebel will become chairman of Enbridge following the deal's completion.
The combined company's assets will include liquids and gas pipelines; midstream gas businesses in the United States and Canada; a top-tier regulated utility portfolio; and a growing renewable power generation business.
The combined company will be headquartered in Calgary, Alberta, and Houston will be the center of the combined company’s gas pipelines business. Gas distribution will continue to be based in Ontario.
The two companies said they would "immediately establish an integration planning team composed of leaders from both management teams to prepare for and oversee the effective and timely integration of the businesses."
According to a presentation on the merger, the deal will require regulatory approves from the Committee on Foreign Investment in the United States and must comply with the Canada Competition Act and the U.S. Hart-Scott-Rodino Act.