The check is in the pipeline

6 Sep 2016 By Kevin Allison

The Canada-based oil-pipeline group is buying Spectra Energy, a U.S. peer focused on natural gas. Expected cost cuts cover the 12 pct premium, while the all-stock structure limits debt and gives Spectra owners upside on projects to come. The question is whether that’s enough.

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Context News

Canada's Enbridge on Sept. 6 said it would buy Spectra Energy of the United States in an all-stock deal worth about $28 billion to create the biggest North American energy-infrastructure company.

Enbridge, Canada's biggest pipeline operator, said it would hand Houston-based Spectra shareholders 0.984 shares of the combined company for each Spectra share. Enbridge said the deal valued Spectra at $40.33 per share, a premium of about 11.5 percent, based on the companies' closing stock prices on Sept. 2.

The combined company will have an enterprise value of around $127 billion, according to the companies. They said they expect the deal to generate around $415 million of annual synergies by late 2018, plus an additional $200 million of tax savings starting in 2019.

Context News

Canada's Enbridge on Sept. 6 said it would buy Spectra Energy of the United States in an all-stock deal worth about $28 billion to create the biggest North American energy-infrastructure company.

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