Topic: How To Invest

The Successful Investor Hotline – Friday, September 9, 2016

Article Excerpt

ENBRIDGE INC., $58.11, Toronto symbol ENB, is buying Spectra Energy Corp. (New York symbol SE) in an all-stock transaction. Based in Houston, Texas, Spectra operates 143,520 kilometres of crude oil and natural gas pipelines in the U.S. and Canada. It also owns oil and gas storage facilities. Under the terms of the deal, Spectra investors will receive $37 billion worth of Enbridge shares. That’s equal to 65% of Enbridge’s current market cap (the value of all outstanding shares) of $56.9 billion. After the transaction, Spectra shareholders will own 43% of the new firm; Enbridge shareholders will own the remaining 57%. The combined company will have over 195,920 kilometres of gas and oil pipelines in North America. In the 12 months ended June 30, 2016, it would have had revenue of $40 billion and earnings before interest and taxes of $5.8 billion. Long-term contracts from oil and gas shippers will provide 96% of the new company’s cash flow. As well, eliminating overlapping operations…