Enbridge to buy Spectra Energy in CAD37bn deal

Canadian pipeline company Enbridge Inc has agreed to buy Houston-based Spectra Energy in an all-stock deal valued at approximately CAD37bn.

Under the terms of the deal, which will create the largest energy infrastructure company in North America, Spectra shareholders will receive 0.984 shares of the combined company for each share of Spectra they own. This represents a premium of around 11.5% to Spectra’s closing price on 2 September.

Following completion of the deal, Enbridge shareholders are expected to own around 57% of the combined company, while Spectra shareholders will own the rest.

Al Monaco, president and chief executive officer of Enbridge, said: “Over the last two years, we've been focused on identifying opportunities that would extend and diversify our asset base and sources of growth beyond 2019.

“"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 said the combination was expected to achieve annual run-rate synergies of CAD540m, most of which should be achieved in the latter part of 2018.

The deal is expected to close in the first quarter of next year.

Spectra Energy shares were up 5.8% to $36.15 in pre-market trade.