Robbins Arroyo LLP: Acquisition of Spectra Energy Corp. (SE) by Enbridge Inc. (ENB) May Not Be in Shareholders’ Best Interests
Robbins Arroyo LLP is investigating the proposed acquisition of Spectra Energy Corp (NYSE: SE) by Enbridge Inc. (Toronto: ENB). On September 6, 2016, the two companies announced the signing of a definitive merger agreement pursuant to which Enbridge will acquire Spectra Energy. Under the terms of the agreement Spectra Energy shareholders will receive 0.984 shares of the combined company, the value of which is equivalent to $40.33 for each share of Spectra Energy common stock.
Is the Proposed Acquisition Best for Spectra Energy and Its Shareholders?
Robbins Arroyo LLP’s investigation focuses on whether the board of directors at Spectra Energy is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $40.33 merger consideration represents a premium of only 11.80% based on Spectra Energy’s 30-day closing price for the period ending on September 2, 2016. This premium is significantly below the average one month premium of nearly 24.00% for comparable transactions within the past three years. Further, the $40.33 merger consideration is below the target price of $41.00 set recently by analysts at Raymond James and Piper Jaffray. In the last three years, Spectra Energy traded as high as $43.12 on July 24, 2014, and most recently traded above the merger consideration – at $40.36 – on September 22, 2014.
On August 3, 2016, Spectra Energy reported strong earnings results for its second quarter 2016. Spectra Energy reported net income from controlling interests of $149 million, a 727% increase from the same period of the prior year. Spectra Energy also reported diluted earnings per share of $0.21, a 600% increase from the same period of the prior year. In commenting on these results, Spectra Energy Chief Executive Officer Greg Ebel remarked, “Spectra Energy achieved another solid quarter thanks to the strength of our diversified portfolio, and our earnings remain in line with the overall expectations we set at the beginning of the year. Not only are we making significant progress advancing our projects already in execution, but our project backlog continues to grow, reaching $10 billion this quarter.”
In light of these facts, Robbins Arroyo LLP is examining Spectra Energy’s board of directors’ decision to sell the company now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
Spectra Energy shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.
Spectra Energy shareholders interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.
Send This Post