Enbridge to buy Spectra for US$28bn

CANADIAN pipeline company Enbridge is set to buy US energy infrastructure company Spectra Energy for US$28bn, creating the largest North American (NA) energy infrastructure company.

The two companies will combine their assets, which comprises crude oil, liquids and natural gas pipelines, terminal and midstream operations, a regulated utility portfolio and renewable power generation.

Enbridge shareholders expect to own 57% of the new company, which will be called Enbridge Inc. The combined company is expected to generate revenues in excess of US$31bn.

The deal is expected to close in Q1 of 2017, subject to regulatory approvals.

Over the last two years, Enbridge has been expanding its North American pipeline network, which carries the bulk of Canadian crude oil to the US. Al Monaco, CEO of Enbridge, said that acquiring Spectra will help achieve Enbridge’s goal of growth before 2019, adding that the combination will give the company more scope to pursue projects in the low oil price climate.

“With combined secured projects in execution of US$20bn and another US$37bn of projects under development, the transaction allows us to extend our anticipated 10–12% annual dividend growth through 2024,” said Monaco.

Enbridge said it will divest approximately US$2bn of non-core assets over the next 12 months to provide financial flexibility.

Spectra’s operations in the US and Canada include approximately 33,800 km of natural gas and crude oil pipelines; approximately 8.5bn m³ of natural gas storage; 4.8m bbl of crude oil storage; and natural gas gathering, processing, and local distribution operations.

The combined company’s headquarters will be in Calgary, Canada; Spectra’s former headquarters in Houston, US will be the combined company's gas pipelines business unit centre. The company is expected to integrate Spectra’s staff.