Enbridge Swallows Spectra as Pipeliners Grapple with Slow Growth
Canada’s largest pipeline company will become North America’s biggest energy infrastructure operator when Calgary-based Enbridge Inc. completes a $37-billion all-share acquisition of Houston-based Spectra Energy Corp., the two companies announced Tuesday.
According to the Globe and Mail, “the combined entity would have a pro-forma enterprise value of about $165 billion and a diversified asset base including crude oil, liquids and natural gas pipelines, terminal and midstream operations, regulated utilities, and renewable energy.”
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The merger announcement was widely covered in the financial press, with Reuters commenting that “the takeover, the most significant energy deal since oil and natural gas prices crashed in mid-2014, highlights how pipeline companies are under pressure to merge as they grapple with overcapacity and sliding tariffs that have slowed dividend growth and unnerved investors.”
The new entity will continue to carry the Enbridge name. It will be led by current Enbridge CEO Al Monaco and maintain its headquarters in Calgary, the firms announced. Existing Enbridge shareholders would own about 57% of the merged firm, former Spectra shareholders the balance.
“The combined company’s natural gas pipelines business would be based in Houston,” CBC reports, while “the liquids pipelines business would be based in Edmonton.” Enbridge’s oil network would continue to be managed from Calgary.
Enbridge has more often been in the news in recent weeks for setbacks—including a missed deadline to begin work on its Northern Gateway project in British Columbia, and its announcement last week that it was suspending a planned $2.6-billion pipeline across Minnesota to connect North Dakota oil fields to a Great Lakes shipping port at Superior, Wisconsin.
The line met “stiff resistance from environmental groups and Native American tribes” whose members “objected to the proposed route across a swath of northern Minnesota rich in sensitive lakes and rivers,” MPR News reports.
An Enbridge project director told MPR the company no longer felt it needed the abandoned route, in light of its acquisition of other pipelines connecting North Dakota to Illinois and Gulf Coast refineries.
But one of those project, the Dakota Access Pipeline, has hit a wall of tribal and environmental resistance that escalated to violence over the weekend.