Enbridge (ENB) Signs Deal to Buy Gas Utilities From Dominion
Enbridge Inc. ENB signed an agreement to acquire three gas utility companies from Dominion Energy D, which would double its gas distribution business.
The deal is valued at $14 billion, which includes $9.4 billion in cash and $4.6 billion in debt. The transaction, subject to regulatory approvals, is expected to complete in 2024.
Enbridge will acquire Dominion’s East Ohio Gas, Public Service Company of North Carolina and Questar Gas. The companies serve about 3 million homes and businesses.
The acquisition will provide Enbridge with gas utility operations in Ohio, North Carolina, Utah, Idaho and Wyoming, depicting a significant presence in the U.S. utility sector.
Once the deal closes, Enbridge will deliver more than 9 billion cubic feet per day of gas to 7 million customers. It would grant the company access to a significant amount of cash from U.S. consumers as they buy gas for cooking and heating purposes.
Enbridge is currently the only major pipeline company in North America, which owns a regulated gas utility. The acquisition will further enhance the company’s position by doubling the size of its gas distribution and storage business.
Although the world is shifting toward renewable energy sources, Enbridge believes that the acquisition will help achieve greater balance and give more exposure to natural gas. The company opines that natural gas will continue to play a crucial role in providing safe and reliable energy.
Natural gas will continue to be a critical fuel to help Enbridge achieve its low-carbon emission targets. The purchase will be accretive to Enbridge’s earnings within the first year and the utilities will offer long-term, predictable cash flow growth.
Based in Richmond, VA, Dominion is one of the largest producers and transporters of energy in the nation. The company’s gas distribution registered strong customer growth in the past three years.
Dominion’s decision to divest three utilities is part of its strategy to create long-term value for shareholders. The company has been focusing on its regulated operations and divesting non-core assets as part of its new strategic plan.
Price Performance
Shares of Enbridge have underperformed the industry in the past three months. The stock has lost 6.9% compared the industry’s 0.8% decline.
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Zacks Rank & Stocks to Consider
Enbridge currently carries a Zack Rank #3 (Hold).
Investors interested in the energy sector might look at the following companies that presently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Core Laboratories N.V.’s CLB strong presence in the emerging shale plays and its global footprint will provide for steady growth rates, going forward. CLB’s technology-heavy portfolio of proprietary products and services gives it the opportunity to optimize production from new and existing fields.
Core Labs has witnessed upward earnings estimate revision for 2023 and 2024 in the past 30 days. The consensus estimate for CLB’s 2023 and 2024 earnings per share is pegged at 88 cents and $1.17, respectively.
Global Partners GLP is a leading operator of gasoline stations and convenience stores. Over the past 60 days, GLP has witnessed upward earnings estimate revisions for 2023 and 2024, respectively.
The Zacks Consensus Estimate for Global Partners’ 2023 and 2024 earnings per share is pegged at $3.46 and $3.69, respectively. GLP currently has a Zacks Style Score of A for Value and Growth.
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