Enbridge's new pipeline behemoth

Enbridge's takeover of Spectra looks like a smart move at a time of shrinking opportunities for pipeline builders

Canadian pipeline operator Enbridge has struck a $28bn (C$37bn) deal to take over US midstream player Spectra Energy. It will create North America's biggest pipeline network and make Enbridge one of the world's largest energy companies. It's an all-stock deal, which should keep both companies' shareholders happy. Spectra owners will get 0.984 Enbridge shares for each of their Spectra shares, which works out to an 11.5% premium on the companies' respective share prices as of 2 September. The premium is modest but comparable to other recent midstream deals. That should please Enbridge investors because it provides growth while conserving cash at a time when hard tender in the sector is scarce.