(Sept. 19) – Consolidation continued in the midstream oil and gas industry, with Canadian pipeline giant Enbridge Inc. announcing Tuesday it was buying what it didn’t own of Enbridge Energy Partners and Enbridge Energy Management for $3.5 billion in stock.
Texas lawyers from three firms played advisory roles.
Vinson & Elkins provided tax counsel to Enbridge. The team members from Texas included partners Ryan Carney in Houston and Jim Meyer in Dallas and associates Christine Mainguy and Jen Maul in Houston.
Bracewell represented the special committees from Enbridge Energy Management and Enbridge Energy Partners. The group included Houston partners Will Anderson on the corporate side, Bradley J. Benoit and Stephen B. Crain on securities/litigation and Lance W. Behnke on tax (he also offices out of Seattle). Austin partner Timothy A. Wilkins advised on environmental matters.
Others on the team were counsel Diane M. Crabtree (securities/litigation) and associates Benjamin J. Martin, Andrew W. Monk and Jay N. Larry (corporate) and Drew Taggart (securities/litigation), all of Houston.
Gibson, Dunn & Crutcher counseled Evercore as financial advisor to the special independent committee of Enbridge Energy Partners’ board. That group included corporate partner Hillary Holmes, corporate associate Justine Robinson and tax partner James Chenoweth, all of Houston.
BofA Merrill Lynch and Scotiabank were financial advisors to Enbridge. McCarthy Tetrault was its Canadian legal and tax advisor and Sullivan & Cromwell was its U.S. legal advisor.
Goldman Sachs was Enbridge Energy Management’s financial advisor while Morris, Nichols, Arsht & Tunnell was legal advisor to both special committees.
Enbridge Energy Partners public unitholders will receive 0.3350 of a common share of Enbridge for each of their units, an 8.7 percent increase to the exchange ratio Enbridge proposed on May 17. Enbridge Energy Management stockholders also will receive 0.3350 of a common share of Enbridge for each of their shares.
Enbridge said the agreements – along with its $3.6 billion purchase of Enbridge Income Fund Holdings Inc. and $3.3 billion acquisition of Spectra Energy Partners – are big milestones in the simplification of its corporate structure.
Enbridge said significant weakening of the U.S. master limited partnership capital markets has adversely affected the expansion opportunities for such entities, which are dependent on consistent access to capital markets at an effective cost to fund projects to grow their distributions.
The company said Enbridge Energy Partners also has been hurt by the income tax allowance policy announcement and order by the U.S. Federal Energy Regulatory Commission and the regulatory rate impact from the U.S. Tax Cuts and Jobs Act.
Enbridge said the transaction premiums are attractive to Enbridge Energy Partners unitholders (8.7 percent) and Enbridge Energy Management’s shareholders (16 percent), particularly in light of the former’s expected distribution reduction as a stand-alone entity.
Enbridge said the transactions offer the units’ stockholders direct ownership in the largest energy infrastructure company in North America with diverse, safe and reliable cash flows, expected 10 percent annual dividend growth through 2020 and a stronger balance sheet and superior credit profile, among other things.
The transactions have to be approved by stockholders of both entities and are expected to close later this year.