Canadian pipeline giant Enbridge buys US rival Spectra

Canadian pipeline operator Enbridge will buy US rival Spectra Energy in a Can$37 billion (US$28 billion) deal that creates North America's largest energy infrastructure firm, the companies announced Tuesday.

The all-stock deal will create an network of oil and gas pipelines serving most of Canada and the United States, with the exception of the US Southwest and California markets.

The combined company, which will be based in Calgary in western Canada, would have annual revenues of more than Can$40 billion and earnings before interest and taxes of just under Can$6 billion, based on figures through June 30.

Shareholders of Calgary-based Enbridge will own approximately 57 percent of the merged company.

Spectra shareholders will receive 0.984 shares in the merged company for each share of Spectra they own. That values Spectra shares at US$40.33, an 11.5 percent premium to the last closing, according to the companies.

Enbridge's network of oil and gas pipelines stretch between the oil sands region of Alberta province and Canadian and US refineries. The company, which employs some 11,000 people, also produces electricity and owns interests in wind farms.

Houston-based Spectra Energy owns oil and gas pipelines stretching more than 21,000 miles (19,300 kilometers) and has a large gas storage capacity.

"Over the last two years, we've been focused on identifying opportunities that would extend and diversify our asset base and sources of growth beyond 2019," said Enbridge chief executive Al Monaco, who will also lead the combined company.

"We are accomplishing that goal by combining with the premier natural gas infrastructure company to create a true North American and global energy infrastructure leader."

Spectra Energy CEO Greg Ebel will become chairman of the combined company.

The deal is expected to close in the first quarter of 2017 after it receives regulatory and government approval.