Canada: Enbridge buying Spectra in $28 billion deal

Canada’s Enbridge said on Tuesday it would buy Spectra Energy of Houston in an all-stock deal valued at about $28 billion to create the largest North American energy infrastructure company.

The takeover, the most significant energy deal since oil and natural gas prices crashed in mid-2014, highlights how pipeline companies are under pressure to merge as they grapple with overcapacity and sliding tariffs that have slowed dividend growth and unnerved investors.

Enbridge’s biggest-ever deal will consolidate its leading position next to US transport giants Kinder Morgan and Plains All American Pipeline, which have seen their stock prices sink over the last two years as oil and gas producers slash spending on new wells.

Enbridge’s pipelines mainly send Canadian oil sands to refiners on the U.S. Gulf Coast, while Spectra’s network ships natural gas to the US East Coast.

The deal has no serious antitrust problems as the companies’ networks have “limited overlap,” said Bruce McDonald, an antitrust expert with Jones Day law firm.

Full Content: Reuters

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