Enbridge to buy three gas utility operations for $14 billion

Enbridge will acquire three gas utility operations, doubling the company’s holdings in the utility sector.

The deal with Dominion Energy allows Enbridge to acquire EOG, Questar and PSNC for an aggregate purchase price of US$14.0 billion, comprised of $US9.4 billion of cash consideration and US$4.6 billion of assumed debt, subject to customary closing adjustments.

Upon the closings of the three transactions, Enbridge will add gas utility operations in Ohio, North Carolina, Utah, Idaho and Wyoming, representing a significant presence in the U.S. utility sector. The company said gas utilities fit Enbridge’s long-held investor proposition of low-risk businesses with predictable cash flow growth and strong overall returns. Following the closings, the acquisitions will double the scale of the company’s gas utility business to approximately 22% of Enbridge’s total adjusted EBITDA and balance the Company’s asset mix evenly between natural gas and renewables, and liquids.

With the delivery of 9.3 billion cubic feet per day (Bcf/d) of gas to customers in the U.S. and Canada, upon closing, Enbridge’s gas utility business will be the largest by volume in North America.

“Adding natural gas utilities of this scale and quality, at a historically attractive multiple, is a once in a generation opportunity,” said Greg Ebel, Enbridge president and CEO. “Following the closings of the acquisitions, our Gas Distribution and Storage (GDS) business will be North America’s largest gas utility franchise. These acquisitions further diversify our business, enhance the stable cash flow profile of our assets, and strengthen our long-term dividend growth profile.  The transaction also reinforces our position as the first-choice energy delivery company in North America.