Enbridge Inc. agreed to acquire the shares it doesn’t already own in three North American units for about $7.1 billion as the Canadian pipeline giant moves to simplify its corporate structure.
The rollup of the so-called master limited partnerships will bring all of Enbridge’s core liquids and natural gas assets under the umbrella of a single publicly traded entity to the benefit of all shareholders and unitholders, it said.
The move is part of a broader trend in the industry. Peers from Williams Cos. to Loews Corp. have ditched MLPs used to hold many oil and gas pipelines after a US tax change sent shares plummeting, making it more difficult to raise money for new projects.
Companies wanted their MLP “to be able to go out on its own two feet and raise money and build things,” said MUFG Securities Americas Inc. analyst Barrett Blaschke. “When that’s not working, you see these simplification trends.”
Regulators in July made major concessions on the initial tax policy change.
While that didn’t stop Enbridge from moving forward with plans to scrap its MLPs, the company last month sweetened its offer to buy Spectra Energy Partners LP after the original proposal failed to include a premium for the partnership’s unitholders.