Enbridge said Tuesday that it will merge with Spectra Energy in a transaction worth $28 billion.

Calgary-based Enbridge has entered into a definitive merger agreement that calls for Enbridge and Spectra Energy to combine in a stock-for-stock merger transaction.

The deal values Spectra Energy common stock at about $28 billion, based on the closing price of Enbridge’s common shares on September 2.

Spectra Energy shareholders will receive 0.984 shares of the combined company for each share of Spectra Energy common stock they own.

The consideration to be received by Spectra Energy shareholders is valued at $40.33 per Spectra Energy share, based on the closing price of Enbridge common shares on September 2.

That price represents an 11.5 percent premium to the closing price of Spectra Energy common stock on September 2.

Upon completion of the transaction, Enbridge shareholders are expected to own about 57 percent of the combined company.

Spectra Energy shareholders are expected to own about 43 percent of the combined company.

The combined company will be called Enbridge Inc.

Enbridge said the combination will create the largest energy infrastructure company in North America and one of the largest infrastructure firms globally based on a pro-forma enterprise value of $127 billion.

On a combined basis for the 12 months ended June 30, the company would have generated combined revenues in excess of $31 billion and combined Earnings before Interest and Taxes of $4.4 billion.

Enbridge said the combined company’s $57 billion organic growth platform is expected to support a “highly visible” dividend growth rate of 10 to 12 percent through 2024.

The combination is expected to achieve annual run-rate synergies of $415 million.

Enbridge expects the majority of the synergies to be achieved in the latter part of 2018.

The transaction has been unanimously approved by the boards of directors of both companies.

The merger is expected to close in the first quarter of 2017, subject to shareholder and certain regulatory approvals and other customary conditions.

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

Spectra Energy president and CEO Greg Ebel will serve as non-executive chairman of Enbridge’s board of directors.

“This transaction is transformational for both companies and results in unmatched scale, diversity and financial flexibility with multiple platforms for organic growth,” Monaco said.


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