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This Megadeal Creates an Energy Infrastructure Giant in North America

September 6, 2016

Key Speakers At IHS CERAWeek 2015 Energy ConferenceKey Speakers At IHS CERAWeek 2015 Energy Conference
Enbridge CEO Al Monaco will lead the combined company.Photograph by F. Carter Smith—Bloomberg via Getty Images

Enbridge (ENB), Canada’s largest pipeline company, said on Tuesday it would buy Spectra Energy (SE) in an all-stock deal valued at about C$37 billion ($28 billion) to create the largest North American energy infrastructure company.

Enbridge’s biggest-ever deal comes as the company has been steadily expanding its North American pipeline network, which carries the bulk of Canadian crude oil to the United States.

Spectra shareholders will get 0.984 shares of the combined company for each Spectra share held. This is equivalent to $40.33 per share, representing a premium of about 11.5% to Spectra’s closing price on Friday.

The deal has a pro-forma enterprise value of C$165 billion, the companies said.


Spectra shares were up 5.8% at $38.25 in light premarket trading. Enbridge, whose U.S.-listed shares were untraded, closed at $40.99 on Friday.

Enbridge Chief Executive Al Monaco will lead the combined company, which will have its headquarters in Calgary.

After the close of the deal, Enbridge shareholders will own about 57% of the combined company.

Houston-based Spectra, which operates in both Canada and the United States, has 21,000 miles (33,800 km) of natural gas and oil pipelines and storage for about 300 billion cubic feet (8.5 billion cubic meters) of natural gas storage and 4.8 million barrels of crude oil.

Enbridge bought a minority stake in the Bakken Pipeline system through a joint venture last month. It also won an auction for a stake in EnBW’s Hohe See, one of Europe’s largest offshore wind power projects, according to a source familiar with the matter.

Credit Suisse Securities (Canada) and RBC Capital Markets were Enbridge’s financial advisers, while Sullivan & Cromwell LLP and McCarthy Tétrault LLP were its legal advisers.

BMO Capital Markets and Citi were Spectra Energy’s financial advisers and Wachtell, Lipton, Rosen & Katz and Goodmans LLP its legal advisers. Skadden, Arps, Slate, Meagher & Flom LLP advised Spectra on tax issues.