Duke natural gas spinoff company sold for $28B

“The combination of Enbridge and Spectra Energy creates what we believe will be the best, most diversified energy infrastructure company in North America, if not the world”, Spectra President and CEO Greg Ebel said in a statement.

Shareholders of Houston-based Spectra will get $40.33 per share, representing a premium of about 12% to the September 2 closing price, according to the statement.

When the deal closes, Enbridge shareholders are expected to own 57 percent of the combined company, which will be called Enbridge Inc., while Spectra shareholders are expected to own about 43 percent.

The company will have assets in crude oil, liquids and natural gas pipelines, terminal and midstream operations. (WMB) amid a stubborn two-year energy rout, while Kinder Morgan (KMI) has moved to simplify its structure.

The companies expect the deal to close in the first quarter of 2017, although it is subject to shareholder approvals from both companies as well as regulatory clearance. The value for the deal is derived taking Enbridge’s closing share price on September 2. If the deal goes through, it will create an energy infrastructure company with the largest pipeline network and storage facilities of natural gas within North America. Enbridge Inc. of Calgary plans to buy Houston-based Spectra Energy Corp. for stock worth $37 billion.

As The Wall Street Journal reports, diversification has become more important “as pipeline operators face the fallout of a prolonged rout in energy prices”.

Houston-based Spectra’s pipeline, storage and processing operations extend from gas fields in northern British Columbia through the U.S. Midwest and to the Gulf of Mexico.

Upon closing of the transaction, Enbridge president and CEO Al Monaco will continue to serve as president and CEO of the combined company.

The pipeline was a backup line to Spectra Energy’s main line of its Texas Eastern Transmission system.

Spectra shares were about 8% higher in pre-market trading at $39.10 while Enbridge shares were about 2% lower at $40.25.

Credit Suisse Securities and RBC Capital Markets acted as financial advisers to Enbridge while Sullivan & Cromwell LLP and McCarthy Tetrault LP provided legal advice. Goodmans LLP and Wachtell, Lipton, Rosen & Katz were legal advisors while Skadden, Arps, Slate, Meagher & Flom LLP were part of the tax counsel. (TSE:ENB) stock were surprised to learn this week that their dividend check from the company may swell by 15% next year – thanks to one of the biggest infrastructure deals in North America.