LONDON, UK / ACCESSWIRE / January 30, 2017 / Active Wall St. blog coverage looks at the headline from Enbridge Inc. (NYSE: ENB) and Midcoast Energy Partners, L.P. (NYSE: MEP). Enbridge announced on January 27, 2017, that it has entered into a definitive agreement with Midcoast Energy Partners to acquire all of the outstanding publicly held common units of Midcoast Energy in cash, for $8 per unit or an aggregate transaction value of $170.2 million, taking it private. Register with us now for your free membership and blog access at:
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The Agreement
The agreement comprises of a definitive merger agreement between Midcoast Energy and Enbridge Energy Company, an indirect subsidiary of Enbridge. Subject to the terms of the agreement, the transaction price represents a 5.5% premium to the trailing 30-day volume weighted average of Midcoast Energy's common units as of January 26, 2017. The transaction is expected to close in Q2 2017. Upon closing, Midcoast Energy will cease to be a publicly traded partnership.
Midcoast Distribution
Midcoast Energy announced that the board of directors of its general partner declared a quarterly cash distribution of $0.3575 per unit on all of its outstanding common and subordinated units, for the quarter ended December 31, 2016. The approved distribution remains unchanged from the previous quarter. The distribution is payable on February 14, 2017, to unit-holders of record at the close of business on February 07, 2017. Upon the payment of the distribution for the quarter ended December 31, 2016, it is anticipated that the subordination period with respect to Midcoast Energy subordinated units owned by Enbridge Energy Partners, L.P. (NYSE: EEP) will end and the subordinated units will convert into common units on a one-for-one basis. Once the subordinated bonds are converted, Enbridge Energy Partners, will own 52% of Midcoast Energy's outstanding common units. Enbridge Inc. currently holds a 21.1% stake in Enbridge Energy Partners, which primarily owns and operates crude oil and NGL in the United States.
Enbridge's Growth Strategy
Enbridge Energy Partners and Enbridge Inc. announced on August 08, 2016, an agreement where Enbridge Energy forms a partnership with Marathon Petroleum Corporation. The joint venture will be controlled by both the Companies where Enbridge Energy will hold 75% stake and Midcoast Energy will reap profits upon its 25% stake in the joint venture. The purchase price was $1.5 billion in cash and the transaction closed in the third quarter 2016. Viewed as a strategic growth move, the acquisition offered the Company to execute development in the segment by accessing a pipeline system which will transport crude oil from the Bakken formation in North Dakota markets.
This agreement was closely followed by the formation of the largest energy infrastructure Company in North America. Enbridge formed an agreement with Spectra Energy Corp. (NYSE: SE), hence bringing in a stock-for-stock transaction, with an enterprise value worth $127 billion on September 06, 2016.
Stock Performance
At the closing bell, on Friday, January 27, 2017, the stock closed the trading session at $43.03, falling 3.02% from its previous closing price of $44.37. A total volume of 4.77 million shares have exchanged hands, which was higher than the 3-month average volume of 2.16 million shares. Enbridge's stock price advanced 0.56% in the last month, 12.21% in the past six months, and 35.74% in the previous twelve months. Furthermore, since the start of the year, shares of the Company have gained 2.16%. The stock is trading at a PE ratio of 28.20 and has a dividend yield of 4.10%. The net market capital for the firm stood at $40.56 billion.
Last Friday, Midcoast Energy Partners' stock slipped 4.57%, ending the trading session at $8.35. A total volume of 1.92 million shares were traded at the end of the day, which was higher than the 3-month average volume of 87.88 thousand shares. In the last month and previous six months, shares of the Company have surged 21.01% and 19.96%, respectively. Moreover, the stock surged 18.44% since the start of the year. The stock has a dividend yield of 17.13%. The net market capital for the firm was $385.37 million.
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