Canadian pipeline operator Enbridge has agreed to acquire US-based Spectra Energy in a deal valued at approximately C$37bn ($28bn).
The combination of these two companies is expected to create a new energy infrastructure company in North America, to be known as Enbridge, which will have an enterprise value of approximately C$165bn ($127bn).
Upon completion of the deal, about 57% of the combined company will be owned by Enbridge shareholders, while the remaining 43% will be owned by Spectra Energy shareholders.
Enbridge president and CEO Al Monaco said: "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.
“With combined secured projects in execution of C$26bn ($20bn) and another C$48bn ($37bn) of projects under development, the transaction allows us to extend our anticipated 10% to 12% annual dividend growth through to 2024.”
The new company will be based in Calgary, Alberta and have an asset base that includes a diverse set of assets comprising crude oil, liquids and natural gas pipelines along with terminal and midstream operations.
Its gas pipelines business unit centre will be in Houston, Texas, while Edmonton, Alberta will remain the business unit centre for liquids pipelines, with gas distribution continuing to be based in Ontario.
Enbridge will also provide integrated services and first and last mile connectivity to key supply basins and demand markets.
Spectra Energy president and CEO Greg Ebel said: "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.
“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."
The combination of these two companies is expected to achieve annual run-rate synergies of C$540m ($415m), the majority of which is expected to be achieved in the latter part of 2018.
The transaction is subject to shareholder and certain regulatory approvals, as well as other customary conditions and is expected to close in the first quarter of next year.
Image: Enbridge building in Edmonton, Alberta. Photo: courtesy of Kyle1278.
