Montney: The Next Generation
THE PARTICULARS: In September, Calgary-based Enbridge announced it was acquiring Spectra Energy of Houston for about $37 billion to create North America’s largest energy infrastructure company. It’s the most significant M&A deal since natural gas prices tanked in 2014. Until now, Enbridge’s main line of business was sending Albertan crude to U.S. Gulf Coast refineries, while Spectra focused on delivering natural gas to the U.S. Northeast. Because of those split interests, it’s unlikely the deal will fall foul of anti-trust laws. Enbridge CEO Al Monaco will continue to head the new firm from Calgary while Greg Ebel, Spectra’s CEO, will become its non-executive chairman.
THE PAYOFF: When the deal closes early next year, Enbridge will issue about 694 million new shares and assume some US$22 billion of Spectra debt. Enbridge shareholders will finish up owning about 57 percent of the post-deal firm in a move that they expect will save $540 million annually. Enbridge also plans to divest about US$2 billion in non-core assets.
The new Enbridge board will be comprised of 13 directors: eight of them designated by Enbridge and five designated by Spectra. “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,” Monaco said, after announcing the deal. In August, Enbridge bought a minority stake in the Bakken Pipeline and a stake in EnBW’s Hohe See, a European offshore wind power project.
Canadian pipeline rival TransCanada completed its own US$10.2-billion takeover deal in July, acquiring Columbia Pipeline Group.