Enbridge to acquire gas utilities from Dominion Energy for $14bn to expand US presence

Enbridge Inc. has struck a monumental deal to acquire three gas utilities—East Ohio Gas Company (EOG), Questar Gas Company, and Public Service Company of North Carolina (PSNC)—from Dominion Energy, Inc. for an aggregate price of US$14 billion. This strategic move will extend Enbridge‘s utility operations across Ohio, North Carolina, Utah, Idaho, and Wyoming. The acquisition aligns with Enbridge’s long-term investor proposition for low-risk businesses with predictable cash flow and robust overall returns.

Enbridge to Become North America’s Largest Gas Utility

Upon closing the deals, Enbridge will become the largest gas utility in North America by volume, with an estimated 7 million customers and over CDN$27 billion in combined rate base. The acquisition significantly boosts Enbridge’s gas utility business, contributing to approximately 22% of the company’s total adjusted EBITDA. This expansion aims to balance Enbridge’s asset mix between natural gas, renewables, and liquids.

Enbridge to acquire natural gas distribution companies from Dominion Energy for $14bn. Photo courtesy of ENBRIDGE INC.

Financial Upsides and Dividend Growth

The transaction is expected to be accretive to Enbridge’s financial outlook, particularly in DCFPS (Distributable Cash Flow Per Share) and adjusted EPS (Earnings Per Share). Enbridge estimates the purchase price to be ~1.3x Enterprise Value-to-Rate Base and ~16.5x Price-to-Earnings. The deal adds substantial shareholder value and enhances the company’s long-term dividend growth profile.

A Win for Sustainable Energy and ESG Goals

All three gas utilities are committed to achieving net-zero greenhouse gas emissions by 2050, aligning well with Enbridge’s ESG (Environmental, Social, and Governance) goals. “This acquisition further diversifies our business and enhances the stable cash flow profile of our assets,” said Greg Ebel, Enbridge President and CEO. The acquired utilities are in jurisdictions with transparent and constructive regulatory regimes, making them ideal fits for Enbridge’s long-term growth targets.

Employee and Community Commitment

The deal includes the integration of over 3,000 new employees into the Enbridge family. Michele Harradence, President of Gas Distribution and Storage (GDS) and Executive Vice President at Enbridge, emphasized the company’s intention to continue the community service legacies of the acquired utilities.

Regulatory Approvals and Financial Considerations

The acquisitions are set to close in 2024, subject to various federal and state regulatory approvals. Financially, Enbridge has also announced an equity offering to finance the transaction, with options for various alternate funding sources.

This landmark acquisition positions Enbridge as a leader in the gas utility sector and underscores its commitment to low-risk, high-return businesses and sustainable energy.