Enbridge Acquires Midcoast Energy Partners: Key Highlights

ENB acquires MEP’s publicly held common shares

On January 27, 2017, Midcoast Energy Partners (MEP) announced an agreement with Enbridge Energy (EECI), an indirect wholly-owned subsidiary of Enbridge (ENB). EECI will acquire all the outstanding publicly held common shares of MEP. Enbridge will acquire MEP shares at a price of $8 per common share for an aggregate transaction value of $170.2 million.

The public interest to be acquired by Enbridge represents a ~25.0% effective interest in Enbridge Energy Partners’ (EEP) natural gas gathering and processing business.

Enbridge Acquires Midcoast Energy Partners: Key Highlights

Midcoast Energy Partners’ performance has been severely impacted over the last couple of years due to low commodity prices. Enbridge and EEP have been working on “strategic alternatives” for MEP for quite some time.

Buy-in of EEP not in the cards

Enbridge has been working on its MLP strategy after the Spectra Energy (SE) acquisition. Under the ongoing strategic review, EEP is considering “the sale of a portion or all of its remaining interests in the natural gas gathering and processing assets, including to ENB.” Midcoast Energy Partners was formed by EEP for the expansion of its natural gas and midstream business.

EEP is also considering a further restructuring of the incentive distribution rights held by ENB. However, according to the company, at this time, ENB is “not planning a buy-in of EEP,” and “EEP is expected to remain a publicly-traded limited partnership subsequent to the strategic review and resulting actions.” The company expects the review to continue into 2Q17.

EEP also announced a joint funding agreement with ENB for its Line 3 Replacement project. EEP expects to use the funds received under this agreement to acquire an additional 15.0% interest in the Eastern Access project.