Enbridge Acquires Three US Firms For US$14 Billion, Plans To Raise $4 Billion

Enbridge Inc. (TSX: ENB) has made significant strides in its expansion strategy by entering into three definitive agreements with Dominion Energy, Inc. These agreements mark the acquisition of EOG, Questar, and PSNC for a total purchase price of US$14.0 billion ($19 billion).

This substantial deal encompasses US$9.4 billion in cash consideration and US$4.6 billion in assumed debt, with customary closing adjustments to be applied.

Upon the successful completion of these three transactions, Enbridge will broaden its gas utility operations footprint, spanning Ohio, North Carolina, Utah, Idaho, and Wyoming, solidifying the firm’s presence in the U.S. utility sector.

Greg Ebel, Enbridge’s President and CEO, commented, “With the closing of these acquisitions, our Gas Distribution and Storage business will emerge as North America’s largest gas utility franchise.” The company boasts a combined rate base exceeding $27 billion and a workforce of approximately 7,000 employees, serving over 9 Bcf/d of gas to approximately 7 million customers, post-acquisition.

Furthermore, these acquisitions will double the scale of Enbridge’s gas utility business, accounting for approximately 22% of the company’s total adjusted EBITDA. This strategic move will also achieve a balanced asset mix between natural gas and renewables, alongside liquids.

In total, the company anticipates that the acquisitions will provide an average annual opportunity for low-risk, long-term capital investment totaling $1.7 billion. These investments come with robust rate rider mechanisms already in place, ensuring the timely recovery of capital expenditures, the firm said.

In tandem with these developments, Enbridge has taken steps to finance a portion of the cash consideration for the Dominion Energy, Inc. acquisitions through an agreement with a syndicate of underwriters led by RBC Capital Markets and Morgan Stanley, and including BMO Capital Markets, CIBC Capital Markets, National Bank Financial Markets, Scotiabank, and TD Securities.

The underwriters have entered into a bought deal for 89,490,000 common shares of Enbridge, generating gross proceeds of $4 billion at an offering price of $44.70 per common share.

The offering is anticipated to conclude on or around September 8, 2023, with the underwriters retaining the option to purchase up to 15% in additional common shares for over-allotments. Should this option be fully exercised, the aggregate gross proceeds from the offering would amount to approximately $4.6 billion.

The completion of the acquisitions is anticipated in 2024, contingent upon the fulfillment of standard closing prerequisites, which include obtaining necessary approvals from U.S. federal and state regulatory authorities.

Enbridge last traded at $45.46 on the TSX.

Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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