Spectra Energy (NYSE:SE) surged +13.4% in today's trade for its biggest gain in more than three years, even staying above the original $40.33/share value of Enbridge's (NYSE:ENB) $28B all-stock offer, as traders clearly believe that antitrust and financing concerns are minimal and that the premium paid for SE was modest considering potential synergies.
The deal has no serious antitrust problems, as the companies' networks have "limited overlap," according to Jones Day antitrust expert Bruce McDonald.
Bloomberg's Liam Denning says combining the two companies "should entrench their advantage when it comes to raising money. Reassuring the capital markets is the no. 1 skill any pipeline executive requires in the aftermath of the crash."
While ENB closed +5% and the Enbridge Energy Partners (NYSE:EEP) MLP ended +2.5%, Spectra Energy Partners (NYSE:SEP) was -1.3% as investors believed that the MLPs would be merged, even though the parent companies said it was not part of their current plans.
SEP, which operates natural gas pipelines, has the lowest cost of capital in the group and would be diluted if it combines with EEP, which is more in crude pipelines, says Rob Thummel of Tortoise Capital, adding that he does not believe the MLPs will be combined.
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