Enbridge Inc. has entered into three separate definitive agreements with Dominion Energy Inc. to acquire East Ohio Gas Co. natural gas distribution companies. (EOG), Public Service Co. of North Carolina Inc. (PSNC) and Questar Gas Co. total purchase price of $14 billion (CAD $19 billion), comprised of $9.4 billion in cash consideration and $4.6 billion in assumed debt.
The acquisitions are expected to close in 2024, subject to the satisfaction of customary closing conditions, including the receipt of certain US federal and state regulatory approvals. These include clearance by the Federal Trade Commission under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, approval by the Federal Communications Committee and approval by the Committee on Foreign Investment, as well as approvals by state utility commissions that regulate EOG, Questar and PSNC, according to separate press releases from Enbridge and Dominion Tuesday.
Completion of the acquisition of each gas service is expected to occur upon receipt of each regulatory approval applicable to each service and is not cross-conditioned among the three gas companies, both companies noted.
After the three transactions are completed, Enbridge will add gas service operations in Ohio, North Carolina, Utah, Idaho and Wyoming, which represent a significant presence in the US utility sector, Enbridge said in its press release. The utilities “fit Enbridge’s investor proposition of low-risk businesses with predictable cash flow growth and strong overall returns,” the company said in the statement.
According to Dominion, the three utilities serve approximately three million homes and businesses and collectively comprise approximately 78,000 miles of natural gas distribution, transmission, gathering and storage pipelines, as well as more than 62 billion cubic feet (Bcf ) of underground and liquefied work. natural gas (LNG) storage capacity; and approximately 400 billion equivalent cubic feet of cost-of-service regulated gas reserves by the end of 2022.
The acquisitions will double the scale of Enbridge’s gas services business to approximately 22 percent of Enbridge’s total adjusted EBITDA and balance the company’s asset mix evenly between natural gas, renewables and liquids, Enbridge said. Following the closing of the acquisitions, Enbridge said its gas services business will be the largest, by volume, in North America, with a combined rate base of more than $19.8 billion (CAD 27 billion) and about 7,000 employees who will deliver more than nine Bcf of gas to approx. seven million customers, according to the company.
“Adding natural gas services of this scale and quality, at a historically attractive multiple, is a once-in-a-generation opportunity. The transaction is expected to be rewarding for DCFPS. [discretionary cash flow per share] and adjusted EPS [earnings per share] in the first full year of ownership, increasing over time due to the strong growth profile,” said Enbridge President and CEO Greg Ebel.
“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 strengthens our position as an energy supply company of choice in North America,” added Ebel.
“The assets we are acquiring have long useful lives and natural gas utilities are ‘must-have’ infrastructure to provide safe, reliable and affordable energy. Additionally, these gas utilities are committed to achieving net zero emissions greenhouse effect by 2050. and are expected to play a critical role in enabling a sustainable energy transition We are very excited about today’s announcement as these companies align with the enterprise risk model of ‘Enbridge and long-term growth goals,’ Ebel said.
“Today and over the long term, natural gas will remain essential to achieving North America’s energy security, affordability and sustainability goals. Individually and collectively, the gas companies are perfectly complementary to the current operations and strategy of the our gas distribution business unit. These companies operate. in regions with very attractive regulatory regimes, offer diverse, low-risk growth opportunities and are capital efficient with short cycles between capital deployments and earnings generation.” , said Michele Harradence, Enbridge’s GDS president and executive vice president.
Following the completion of the acquisitions, EOG, PSNC and Questar will continue to be regulated by the Public Utilities Commission of Ohio, the North Carolina Utilities Commission and the Public Utilities Commissions of Utah, Wyoming and Idaho, respectively , according to Enbridge. liberation
Enbridge said it obtained debt financing commitments totaling $9.4 billion from Morgan Stanley and Royal Bank of Canada for the cash consideration component of the acquisitions to further demonstrate liquidity and funding ability to close the transactions Collectively, the company expects the utilities to add $1.25 billion (CAD 1.7 billion) of long-term, low-risk equity investment opportunities annually on average, with significant built-in rate mechanisms, which allow the timely recovery of capital investments, according to the statement.
“Acquiring these natural gas companies makes strong strategic and financial sense. Enbridge is currently the only major midstream and pipeline company that owns a regulated gas company, and today we strengthened that position by doubling the size of our GDS business. Following the closings, the Acquisitions will expand and diversify our natural gas footprint and, importantly, add low-risk, affordable investments to our growth portfolio,” said Patrick Murray, Executive Vice President and Chief Financial Officer from Enbridge. “The financing plan for the transaction includes significant equity pre-financing and a suite of financing options that will be optimized to maximize accretion and protect our strong investment grade ratings.”
“We are delighted to partner with Enbridge, which shares our ideals of employee engagement, regulatory transparency, investment in the local community and exceptional customer service,” said Chairman, President and Dominion Energy CEO Robert Blue at Dominion’s announcement. “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 for the benefit of employees, customers and communities alike. Specifically, as part of the agreements, Enbridge has agreed to provide important protections to existing employees, honor existing union commitments and maintain local operational leadership.”
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