Enbridge, one of the leading energy delivery companies in North America, has announced its agreement to purchase three U.S. based utilities from Dominion Energy. This landmark deal will result in the creation of the largest natural gas utility franchise on the continent.
Under this $14 billion agreement, Enbridge will acquire the East Ohio Gas Company, Public Service Company of North Carolina, and Questar Gas and its related Wexpro companies. The transaction will consist of a cash consideration of $9.4 billion and assumed debt of $4.6 billion. To finance the cash component, Enbridge has secured debt financing commitments of $9.4 billion from Morgan Stanley and Royal Bank of Canada. Furthermore, Enbridge has recently completed a $4 billion Canadian dollar bought-deal offering of common shares to fully address its planned equity issuance needs for this transaction.
Enbridge expects the acquisition to have a positive impact on distributable cash flow per share and adjusted earnings per share in the first full year of ownership. Once the deal is finalized, the balance of Enbridge's earnings mix will be approximately 50% natural gas and renewables and 50% liquids.
Dominion Energy, on the other hand, has stated that this sale is part of its ongoing business review. The company plans to conclude the review and announce its repositioned outlook in the fourth quarter of this year.
While Enbridge shares experienced a decline of 7.28% in the after-hours market following this announcement, the long-term opportunities presented by this acquisition position the company for future growth. Similarly, Dominion Energy's shares were down 9.6%, reflecting investors' response to the transaction.