On Tuesday, Canadian midstream company Enbridge Inc (TSX:ENB). (TSX:NYSE:ENB, NYSE:ENB) announced a series of agreements to acquire multiple utility companies from Dominion Energy, Inc. (NYSE:NYSE:D). The deals, which include the purchase of Dominion Energy Questar Corporation, Public Service Company of North Carolina, Incorporated, Questar Gas Company and Wexpro Company, are collectively valued at $14 billion. The agreement encompasses a cash payment of $9.4 billion and $4.6 billion of absorbed debt.
To finance the acquisition, Enbridge has secured a commitment letter from Morgan Stanley Senior Funding, Inc. and Royal Bank of Canada (TSX:RY) for a 364-day senior unsecured bridge facility in an aggregate initial principal amount of $9.4 billion. If the transaction were to terminate, Enbridge would be liable to pay a termination fee of $154.8 million.
The transaction is expected to close in 2024.
Enbridge also announced a bought-deal offering of common shares totaling C$4 billion at a price of C$44.70 per share, which led to a more than 6% drop in ENB stock in after-hours trading on Tuesday.
The acquisition marks a strategic shift for Enbridge as it aims for a more balanced asset mix, moving towards an even split between natural gas & renewables and crude oil & liquids. The deal will establish Enbridge as North America's premier natural gas supplier and double its gas distribution business.
Enbridge's CEO, Greg Ebel, emphasized the significance of the acquisition in terms of energy transition, referring to the assets as "must-have" infrastructure necessary for providing safe, affordable and reliable energy solutions. The transaction will extend Enbridge's reach to seven million customers across various states.
McGuireWoods LLP acted as legal advisor and Citi and Goldman Sachs & Co (NYSE:GS). LLC served as co-financial advisors to Dominion Energy. Sullivan & Cromwell LLP and McCarthy Tétrault LLP were legal advisors to Enbridge while Morgan Stanley & Co (NYSE:MS). LLC and RBC Capital Markets acted as co-lead Financial Advisors.
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