Enbridge Inc. to merge with Spectra Energy

Written By: Stratton Report
September 6, 2016

On September 6, Enbridge Inc. and Spectra Energy Corp announced that they will combine in a stock-for-stock merger transaction valuing Spectra Energy common stock at approximately CAD 37 billion ($28 billion). The combined company will be called Enbridge Inc.

The combination will create what the parties describe as the largest energy infrastructure company in North America based on a pro-forma enterprise value of approximately CAD 165 billion ($127 billion).

The merger is expected to close in the first quarter of 2017.

Shareholders will receive 0.984 shares of the combined company for each share of Spectra Energy common stock they own, valued at $40.33 per Spectra Energy share. This is approximately an 11.5 percent premium to the closing price of Spectra Energy common stock on September 2, 2016.

Enbridge shareholders are expected to own approximately 57 percent of the combined company and Spectra Energy shareholders are expected to own approximately 43 percent.

This combination brings together two highly complementary platforms with an asset base that includes a regulated utility portfolio and renewable power generation.

On a combined basis for the 12 months ended June 30, 2016, the company would have generated combined revenues in excess of CAD 40 billion ($31 billion) and combined Earnings before Interest and Taxes (EBIT) of CAD 5.8 billion ($4.4 billion).

Al Monaco, President and CEO of, Enbridge Inc. noted:

“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. 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. 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, who will become chairman of Enbridge remarked: “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. This is an incredible opportunity for both companies and we at Spectra Energy could not be more excited about what it means going forward. 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.”

Enbridge expects the merger will be neutral to its 12 percent to 14 percent secured ACFFO per share CAGR guidance through the 2014-2019 time period, and strongly additive to its growth beyond that timeframe.

Enbridge expects it will divest of approximately $2 billion of non-core assets over the next 12 months to provide additional financial flexibility.

Credit Suisse Securities (Canada), Inc. acted as Lead Financial Advisor and delivered an opinion to Enbridge’s Board of Directors. RBC Capital Markets also acted as financial advisor to Enbridge and delivered an opinion to Enbridge’s Board of Directors. Sullivan & Cromwell LLP and McCarthy T├ętrault LLP were legal advisors to Enbridge.

BMO Capital Markets and Citi acted as Joint Lead Financial Advisors to Spectra Energy’s Board of Directors. Wachtell, Lipton, Rosen & Katz and Goodmans LLP acted as legal advisors to Spectra Energy and Skadden, Arps, Slate, Meagher & Flom LLP acted as tax counsel.