North America’s Largest Energy Infrastructure Firm
Calgary-based Enbridge Inc. is buying Houston’s Spectra Energy, numerous media outlets report. The purchase will make Enbridge North America’s largest energy infrastructure firm. Analysts value the deal at $37 billion.
Deal Will Form Canada’s Fourth-Largest Company
If the deal is approved by US and Canadian regulators, it will be one of the largest takeovers in Canadian history. In addition to becoming North America’s largest energy infrastructure company, Enbridge will become the Canada’s fourth-largest firm by market capitalization, with a value of approximately $165 billion and annual revenues of around $40 billion. The company will operate 60,000 kilometres of oil and gas pipelines, as well as tankage, terminals and other midstream assets. Enbridge’s chief executive officer Al Monaco says he expects the move will help to mitigate the effects of the global energy downturn on the company.
Oil and Gas Asset Balance
Significantly, Enbridge has traditionally been an oil pipeline-focused firm while Spectra has emphasized natural gas transport in its portfolio. The newly-merged company’s assets will be almost evenly split between the two commodities. 49% of the company’s holdings are expected to be liquids infrastructure, with 47% gas and 4% power making up the balance.
Welcome News in Energy Infrastructure Industry
The news is a welcome bright spot in an industry beset by financial and public relations worries of late. For example, Enbridge’s controversial Northern Gateway project proposal has been enmeshed in high-profile delays and legal challenges. Additionally, fellow pipeline operator TransCanada’s Energy East pipeline project has been in the news after the NEB’s review panel resigned amid controversy.
In addition to obtaining government approvals, the purchase must also first pass a shareholder vote. Enbridge expects to finalize the deal in the first quarter of 2017.