Enbridge Inc. (NYSE: ENB) and
Spectra Energy Corp. (NYSE: SE) reached a
definitive deal in a stock-for-stock merger transaction. The transaction values Spectra Energy approximately $28 billion based on
Enbridge's shares closing price on September 2.
The merged entity would establish the biggest energy infrastructure firm in North America. The transaction would also establish
one of the biggest pro-forma enterprise values of about $127 billion. The companies expect the transaction to be completed in the
first quarter.
According to the transaction terms, Spectra shareholders would get 0.984 shares of the merged company for every share they
current hold. In terms of consideration, this worked out to $40.33 a share or 11.5 percent premium to the closing price of Spectra
Energy on September 2.
Once the transaction is completed, Enbridge shareholders would represent 57 percent of the merged entity while Spectra Energy
shareholders would own the remaining about 43 percent. The merged entity would be known as Enbridge Inc. Spectra President and CEO,
Greg Ebel, would become the Chairman of the merged firm.
For the 12-month period ended June, both the companies' earnings before EBIT were $4.4 billion on revenue of US$31 billion.
Enbridge President and CEO, AI Monaco, said, "We are accomplishing that goal by combining with the premier natural gas
infrastructure company to create a true North American and global energy infrastructure leader. This Transaction is
transformational for both companies and results in unmatched scale, diversity and financial flexibility with multiple platforms for
organic growth."
The companies expect merged firm to achieve annual synergies of US$415 million and most of them would be achieved in the latter
part of 2018.
Spectra traded up by $2.79, or 7.72 percent, to $38.94.
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