Spectra Energy, a natural gas company, will be merging with Enbridge, an energy transportation and distribution company, in a deal that will value SE at $28 billion. The stock-for-stock merger will have SE shares valued at $40.33. Each shareholder will get 0.984 shares of the combined company’s stock for each SE share they own.
The $40.33 value for SE shares represents an 11.6% premium over the stock’s closing price on Sept. 2, 2016. Once the deal is completed, SE stockholders will own 43% of the new company and Enbridge stockholders will own the remaining 57%.
If successful, the merging of Spectra Energy and Enbridge will result in the creation of the largest energy infrastructure company in North America. A combined basis would have had the merged company reporting revenue of $32 billion for the 12 months ended on June 30, 2016. EBIT would have been $4.4 billion.
Once the merger of Spectra Energy and Enbridge is complete, there will be changes in leadership. ENB CEO Al Monaco will continue to lead the company. Greg Ebel, the CEO of SE, will become the Chairman of Enbridge’s Board of Directors. The Board will be made up of eight Enbridge picks and five Spectra Energy picks. Other management changes will also occur.
The merger has also already received approval from both SE’s and ENB’s Board of Directors. However, it still needs approval from shareholders and regulators before it can be finalized. The two company’s are expecting the deal to close in the first quarter of 2017.
SE stock was up 13% and ENB stock was up 4% as of Tuesday morning.