Canada’s Enbridge (TSE:ENB) and US natural gas-focused peer Spectra Energy (NYSE:SE) have agreed to merge and form North America’s largest energy infrastructure company, with a renewables and alternative energy portfolio of nearly 2 GW.
The combination will create a company with an enterprise value of CAD 165 billion (USD 128m/EUR 114m). The deal values Spectra Energy’s common stock at around CAD 37 billion, based on Enbridge's closing on September 2, 2016.
This new energy infrastructure giant will hold crude oil, liquids and natural gas pipelines, terminal and midstream operations, along with a regulated utility and renewable power portfolios. On the renewables front, Enbridge is invested in wind, solar and geothermal power assets. Among the larger ones are the 300-MW Blackspring Ridge wind farm in Alberta, 300-MW Lac-Alfred wind park in Quebec, the 250-MW Cedar Point wind farm in Colorado, and the 202-MW Magic Valley I and 200-MW Wildcat wind power facilities in Texas and Indiana, respectively.
Enbridge is currently working on the 103-MW New Creek Wind Project in West Virginia and is a minority investor, with a 24.9% stake, in the 400-MW Rampion Offshore Wind Project in UK waters.
The combined company will operate under the name Enbridge Inc and will be headquartered in Calgary, Alberta. It will be led by Enbridge’s current president and CEO, Albert Monaco. Spectra’s head Greg Ebel will become non-executive chairman of Enbridge's board of directors.
On a combined basis for the 12 months ended June 30, 2016, the new Enbridge would have had revenues of over CAD 40 billion and earnings before interest and tax (EBIT) of CAD 5.8 billion.
“With combined secured projects in execution of CAD 26 billion and another CAD 48 billion of projects under development, the Transaction allows us to extend our anticipated 10%-12% annual dividend growth through 2024,” said Al Monaco.
The terms of the deal call for Spectra Energy’s stockholders to get 0.984 shares of the combined company for each SE share they own presently. This is equal to receiving USD 40.33 per Spectra Energy share, according to the press statement. Enbridge’s investors are expected to hold a combined stake of about 57% in the enlarged company upon completion, while those of Spectra Energy will own the rest of the shares.
The all-stock transaction is seen to be wrapped up in the first quarter of 2017, subject to stockholder and regulatory approvals.
(CAD 1.0 = USD 0.774/EUR 0.693)
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Canada wind farm. Author: Wilson Hui. License: Creative Commons
