With Spectra Energy Deal, Enbridge Seeks To Upstage Kinder Morgan

Enbridge Inc. is angling to be the must own pipeline stock in North America, supplanting struggling industry bellwether Kinder Morgan KMI +2.19%.

That’s the takeaway from Enbridge’s $28 billion all-stock acquisition ofSpectra Energy SE +13.42%, a deal the Calgary-based company says will create the largest energy infrastructure firm in North America with a combined enterprise value of $127 billion, surpassing competitors Kinder Morgan, Energy Transfer and Enterprise Products Partners.

Tuesday’s deal diversifies Enbridge’s oil-heavy transport and midstream operations into natural gas, it creates a USA-to-Canada operation that achieves the objectives of the Keystone XL Pipeline, and puts the combined company on track for double digit dividend growth rates in the coming years.

At a time when Energy Transfer had to rely on legal loopholes to renege from a $33 billion deal for Williams and Kinder Morgan has slashed its dividend to digest a $44 billion master limited partnership consolidation two years ago, it is Enbridge’s deal for Spectra that may deliver on the promise of pipeline consolidation.