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Enbridge and Spectra Energy join forces to create $165 billion pipeline behemoth

Enbridge and Spectra Energy join forces to create $165 billion pipeline behemoth

Canada's largest pipeline operator got a bit bigger this week. Enbridge announced an all-stock acquisition of Houston-based Spectra Energy for approximately $37 billion. Spectra operates 21,000 miles of natural gas and crude oil pipelines, 300 billion cubic feet of natural gas storage and 4.8 million barrels of crude oil storage in both Canada and the US.

The friendly deal will result in the formation of a new company to be named Enbridge Inc., valued at an estimated $165 billion. 

Enbridge CEO Al Monaco will continue to serve as president and CEO of the combined company, which will become North America's largest infrastructure company.

Enbridge shareholders will own 57% of the new Enbridge. Spectra shareholders own the remaining 43%. Spectra CEO Greg Ebel will become chairman of the new Enbridge.

Enbridge plans to divest of approximately $2 billion worth of non-core assets over next year to pay for the acquisition. The combined company has $74 billion worth of growth projects on the books, with $26 billion currently in execution. 

Enbridge expects to increase its dividend 15% next year and over 10% per year through 2024.

Company headquarters will remain in Calgary. The company's gas pipelines business unit will be based in Houston. The liquids business will remain in Edmonton while gas distribution will continue to be based in Ontario.

The transaction has already been unanimously approved by the boards of directors of both companies and is expected to close early next year. The deal is subject to shareholder and regulatory approval.

ALL FIGURES IN CANADIAN DOLLARS UNLESS OTHERWISE STATED. ALL GRAPHICS AND CHARTS COURTESY ENBRIDGE.
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