SEP Spectra Energy Partners, LP Common Units Representing Limited Partner Interests (delisted)

By Allison Prang 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (August 25, 2018).

Oil and gas pipeline operator Enbridge Inc. has reached a deal to buy the rest of Spectra Energy Partners LP for about $3.3 billion in stock.

Calgary-based Enbridge, which owns about 83% of Spectra, is offering about 1.11 of its shares for each unit of Spectra it doesn't already own.

Enbridge said buying the rest of Spectra, a master limited partnership, helps simplify its corporate structure. The company also said the purchase will provide tax benefits after 2020.

Master limited partnerships in the energy sector gained favor because of the tax benefits they could reap. However, a decision from the Federal Energy Regulatory Commission earlier this year portended curbs on some of those benefits. At the time, one analyst said FERC's move would speed up the conversion of partnerships into corporations.

In July, however, FERC released guidance that preserved a key benefit for certain master limited partnerships regarding the treatment of accumulated deferred income taxes.

Williams Cos., a Tulsa, Okla.-based natural-gas-pipeline operator, was among the companies that pursued a deal after the ruling. In May it announced it would buy the 27% of Williams Partners it didn't already own for about $10.5 billion in stock.

The Enbridge deal announced Friday comes after it proposed in May to buy out Spectra unit holders, offering about 1.01 shares in Enbridge for each unit of Spectra it didn't own.

Spectra's board delegated a committee of independent directors to evaluate the May proposal. That same committee recommended the full board approve the latest Enbridge offer. Spectra's board approved the deal.

Spectra unit holders collectively would own about 5% of Enbridge shares after the transaction closes.

Spectra, based in Houston, has over 15,000 miles in transmission pipelines and stores natural gas and crude oil.

Spectra units rose 3.6% in premarket trading.

Write to Allison Prang at allison.prang@wsj.com

(END) Dow Jones Newswires

August 25, 2018 02:47 ET (06:47 GMT)

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