Canada-based Enbridge has agreed to acquire three natural gas distribution companies in the US from Dominion Energy for an aggregate price of C$19bn ($14bn).
Through the three separate deals, the pipeline and energy company will acquire East Ohio Gas, Public Service Company of North Carolina, and Questar Gas and its related Wexpro companies.
Collectively, the companies have around 1,25,528.8km of natural gas distribution, transmission, gathering, and storage pipelines. They have a combined working underground and liquefied natural gas (LNG) storage capacity of over 62 billion cubic feet (Bcf), and around 400Bcfe of cost-of-service regulated gas reserves as of year-end 2022.
The total consideration of the transactions is comprised of $9.4bn in cash and $4.6bn of assumed debt.
Upon the closing of the three deals, Enbridge will add gas utility operations across Ohio, North Carolina, Idaho, Utah, and Wyoming. This represents a considerable presence in the American utility sector, said the Canadian firm.
The gas utilities align with Enbridge’s longstanding investor proposition, characterised by low-risk enterprises, predictable cash flow growth, and robust overall returns.
After the acquisitions are finalised, they will effectively double the size of the company’s gas utility segment, accounting for roughly 22% of Enbridge’s total adjusted EBITDA. This will also help achieve a balanced asset mix, evenly distributing resources between natural gas, renewables, and liquids.
Furthermore, Enbridge’s gas utility division is expected to become the largest in North America in terms of volume with a combined rate base exceeding C$27bn ($19.8bn) and a workforce of approximately 7,000 employees.
The business unit of Enbridge will be responsible for supplying over nine billion cubic feet per day (Bcf/d) of gas to around seven million customers.
Enbridge president and CEO Greg Ebel said: “Adding natural gas utilities of this scale and quality, at a historically attractive multiple, is a once in a generation opportunity. The transaction is expected to be accretive to DCFPS and adjusted EPS in the first full year of ownership, increasing over time due to the strong growth profile.
“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.”
Dominion Energy expects to realise total estimated after-tax proceeds of $8.7bn, which will be utilised for reducing parent debt along with the conveyance of $4.6bn of operating company debt.
Dominion Energy chair, president, and CEO Robert Blue said: “As one of the largest and most experienced operators of energy infrastructure assets in North America, Enbridge will be an outstanding steward of these businesses to the benefit of employees, customers, and communities alike.”
The acquisitions are anticipated to be finalised in 2024, subject to the meeting of standard closing conditions. These include obtaining specific necessary approvals from US federal and state regulatory authorities.
