Blog Coverage Oil and Gas Pipeline Business Sees Major Consolidation, Canada Based Enbridge to Acquire Spectra Energy

LONDON, UK / ACCESSWIRE / September 7, 2016 / Active Wall St. blog coverage looks at the headline from Enbridge Inc. (NYSE: ENB) as the company announced on September 6, 2016, that it plans to acquire Spectra Energy Corp. (NYSE: SE) in an all stock deal valued at US $ 28 billion (C$ 37 billion). Register with us now for your free membership and blog access at: http://www.activewallst.com/register/.

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Enbridge is a Canadian Company that operates the world’s longest crude oil and liquids transportation system across Canada and the U.S.

Spectra Energy is a Houston, Texas based FORTUNE 500 Company which is one of the biggest pipeline and energy infrastructure firm.

Terms of engagement

The combined entity shall be known as Enbridge Inc. with headquarters in Calgary, Canada. The cost of each share works out to around $40.33 per share. The price is at 11.5% premium of the closing price of Spectra Energy’s share on September 2, 2016 of $36.15. On culmination of the deal, Enbridge’s shareholders will own 57% of the combined entity whereas Spectra Energy’s shareholders will own the remaining 43%. The merger will give birth to one of the largest energy infrastructure companies in North America. The combined enterprise value of the new entity is estimated to be US$127 billion. As per terms of the agreement, each shareholder of Spectra Energy will receive 0.984 share of the combined entity. The new entity will be listed on the Toronto Stock Exchange and the New York Stock Exchange once the processes are in place. Simultaneously, Spectra Energy would cease to exist and its shares shall be de-listed from NYSE. The deal is expected to close in the first quarter of 2017.

Al Monaco, President and Chief Executive Officer of Enbridge said of the deal:

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

Greg Ebel, President and Chief Executive Officer of Spectra Energy stated:

“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.”

Leadership Team at the Helm

Once the deal goes through, Al Monaco will be the President and Chief Executive Officer of the combined company whereas Greg Ebel will serve as non-executive Chairman of Enbridge’s Board of Directors. The Liquids Pipelines & Major Projects division will be headed by Guy Jarvis, President and the Gas Transmission & Midstream business will be headed by Bill Yardley, President. John Whelen will lead the finance department as Executive Vice President & Chief Financial Officer. The other key personnel will be finalized soon.

Synergies of the Combined Entity

Lower oil and gas prices have created a wave of consolidations in the oil pipeline industry. On the same day Enbridge announced its agreement, EOG Resources Inc., a leading U.S. shale oil producer, said it would acquire Yates Petroleum Corp. Under the terms of this private, negotiated transaction, EOG will issue 26.06 million shares of common stock valued at $2.3 billion and pay $37 million in cash, subject to certain closing adjustments and lock-up provisions. Earlier on July 1, 2016, TransCanada Corp., Canada’s second-largest pipeline operator, announced the completion of the transaction to acquire all of the outstanding shares of Columbia Pipeline Group, Inc. for an aggregate purchase price of approximately US$13 billion, including the assumption of approximately US$2.8 billion of debt.

The Enbridge/ Spectra Energy merger makes great strategic and financial sense for Enbridge. It creates great value for shareholders in the long-run. The combined entity will have secured projects in execution worth US$ 20 billion(C$26 billion) and projects under development worth US$ 37 billion (C$ 48 billion). This deal will ensure at least 10%-12% dividend growth annually through 2024. The new entity is expected to achieve annual cost savings worth US$415 million (C$540 million), the majority of which should be achieved in 2018. Enbridge is looking at strengthening its cash reserves by divesting from non-core assets valued at $ 2 billion.

Stock Performance

Investors gave a bullish signal to the news of the merger between Enbridge and Spectra Energy. At the end of yesterday’s session, Enbridge’s shares jumped 5.05% to finish the trading session at $ 43.06. A total volume of 26.34 million shares exchanged hands, which was higher than the three months average volume of 997.46 thousand shares. Enbridge’s stock price has advanced 34.00% on a YTD basis.

Spectra Energy’s shares surged 13.42% to end the day at $ 41.00 at the closing bell of September 6, 2016 session. The daily volume of 64.01 million shares for this session crushed the stock’s 3 months average volume of 4.01 million shares. Spectra Energy’s shares have advanced 77.93%, since the start of the year.

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