Enbridge Inc. and Spectra Energy Corp. have entered into a definitive merger agreement under which the two companies will combine in a stock-for-stock merger transaction. The combination will create the largest energy infrastructure company in North America and one of the largest globally, the companies said, based on a pro-forma enterprise value of roughly $127 billion.
The merger, which valued Spectra Energy common stock at $28 billion, is expected to close first-quarter 2017, subject to shareholder and regulatory approvals and other customary conditions.
Spectra shareholders will receive 0.984 shares of the combined company for each share of Spectra Energy common stock they own. The consideration to be received by Spectra Energy shareholders is valued at $40.33/share of Spectra Energy, based on the Sept. 2 closing price of Enbridge common shares, representing an 11.5% premium to the closing price of Spectra Energy common stock. On completion of the merger, Enbridge shareholders are expected to own about 57% of the combined company and Spectra Energy shareholders about 43%. The combined company will be called Enbridge Inc.
Enbridge has a number of expansion projects currently under way, including a share of the Bakken Pipeline crude project (OGJ Online, Aug. 4, 2016). The company also recently resolved federal charges regarding 2010 leaks from its crude oil pipelines in Illinois and Michigan.