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article imageEnbridge to buy all public equity of Spectra Energy

By Karen Graham     Aug 24, 2018 in Business
Calgary - Enbridge Inc. has signed a deal to acquire the outstanding public units in Spectra Energy Partners LP it doesn't already hold in a transaction valued at C$4.3 billion.
Calgary-based Enbridge has been under pressure to sell off noncore assets and reduce its debt, and today they announced they have entered into a definitive agreement with Spectra Energy after sweetening the deal a bit.
Enbridge raised its offer to 1.111 of its common shares for each Spectra unit. This is 9.8 percent higher than the initial exchange ratio offered by Enbridge of 1.0123 on May 17, 2018. The transaction is valued at US$3.3 billion - CAN$4.3 billion.
As a result of the agreement, Enbridge will acquire all 81.9 million outstanding common units of SEP, and based on the agreed exchange ratio, would issue about 91 million Enbridge common shares.
Back in July, Chief executive Al Monaco said the company's plan was to simplify and streamline Enbridge's corporate and capital structure and is part of a strategy to move the company toward a purely regulated pipeline and utility business model.
Enbridge's plan is also aligned with the U.S. Federal Energy Regulatory Commission's decision in March this year to stop pipeline companies from claiming an income tax allowance as part of the fees they charge shippers. “Significant weakening of the US Master Limited Partnership capital markets has adversely affected the growth opportunities for MLPs, including Spectra,” Enbridge said in a statement, reports Reuters.
The deal is expected to close in the fourth quarter of this year. Spectra Energy shares rose 5.7 percent to $40 in premarket trading, while those of Enbridge were marginally down.
More about Enbridge, Spectra Energy, outstanding units, reorganization, US Tax allowances
 
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