Enbridge Inc. is set to begin a merger with Spectra Energy Corp. A CAN$37 billion deal will create a new integrated pipeline giant, with a combined value of US$127 billion. The deal is scheduled to close in 1Q17.
According to the Financial Post, the combined enterprise value of US$127 billion will create the largest pipeline company by market value in North America, overtaking a competitor, Kinder Morgan Inc. The combined entity would also position Enbridge as the fourth largest company in Canada.
The combined company would operate under the Enbridge name. It would have CAN$26 billion worth of projects currently underway and CAN$48 billion of projects planned from 2019 onwards.
Spectra and Enbridge comment
Spectra’s President and CEO, Greg Ebel has reportedly said that this merger will allow the new corporation to deliver oil or gas from all of the major production areas in North America to key markets. For example, the deal will raise Enbridge’s presence in Pennsylvania, where TransCanada Corp. – one of Enbridge’s competitors – has also made a major acquisition with the purchase of Columbia Pipeline Group Inc. for US$13 billion.
As a result of the merger, the Financial Times has reported: “Enbridge shareholders [would get] 57% and Spectra shareholders 43% of the merged group.”
Al Monaco, president and CEO of Enbridge commented: “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.”
Monaco also highlighted that as a combined company, it could invest in natural gas pipeline projects across the US and look at widening its scope to other sectors –such as offshore wind power generation.
Investors of both companies seemed to approve of the deal, with Enbridge shares increasing by 3.85% in Toronto trading and Spectra’s jumping 13.45% in New York.
On the other hand, opposers of Enbridge's Northern Gateway project are concerned. Enbridge is set to take over 55% of British Columbia's (BC’s) gas pipelines, some major gas processing plants and potential projects. It will also take over Spectra's stake in a major liquified natural gas export proposal.
"Enbridge doesn't have a social licence to operate in northern BC," said Nadia Nowak, a Prince George student who has been vocal in her opposition to Northern Gateway. "I think people will feel quite nervous about them."
Nowak asked: "Are they hoping […] to convert gas pipelines to oil pipelines? Are they realising they failed to export oil sands crude and are hoping to have better luck with LNG?"
Edited from various sources by Anna NicklinSources: The Financial Times, The Financial Times Fast FT, CBC News, The Financial Post
Read the article online at: https://www.worldpipelines.com/business-news/07092016/enbridge-and-spectra-energy-to-merge/