Enbridge Inc. (NYSE:ENB) stock is trading lower in Thursday’s premarket session after the Canadian energy infrastructure company agreed to acquire Tallgrass Energy’s crude oil business for $2.55 billion in cash and announced a 2.6 billion Canadian dollar equity offering to help fund its acquisitions.
Enbridge said Wednesday it agreed to acquire Tallgrass Energy’s crude oil transportation business for $2.55 billion in cash, expanding its pipeline network across major U.S. oil-producing regions.
The deal will give Enbridge a stronger link between the Bakken, Powder River and Denver-Julesburg basins and the key Cushing, Oklahoma, oil hub. It also complements the company’s existing Express-Platte pipeline system.
What Enbridge Is Buying
The transaction includes a 75% stake in the 1,050-mile Pony Express Pipeline. The system can transport about 460,000 barrels per day and connects Rockies production to Cushing.
Enbridge will also acquire a 51% stake in the Powder River Gateway system. Its two crude pipelines have combined capacity of about 240,000 barrels per day.
The deal also includes about 8.4 million barrels of storage capacity across nine terminals and the Stanchion Energy crude marketing business.
Enbridge valued the acquisition at an estimated 10 to 11 times forward enterprise value to EBITDA.
The company expects the transaction to increase distributable cash flow per share in its first full year of ownership. However, the expected late-2026 closing means the acquisition will not materially affect Enbridge’s 2026 financial guidance.
Pony Express Expansion Adds Growth
The acquisition includes the $300 million PXP2 expansion project. Enbridge expects the project to increase Pony Express capacity to about 515,000 barrels per day.
PXP2 is backed by take-or-pay contracts and is scheduled to enter service in late 2027. After the Tallgrass deal closes, Enbridge plans to add the project to its $41 billion secured growth backlog.
The acquisition remains subject to regulatory approvals and customary closing conditions, including U.S. antitrust clearance.
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Enbridge Launches Canadian-Dollar 2.6 Billion Share Sale
Enbridge also said Wednesday it launched a bought-deal offering of 38.9 million common shares at 66.85 Canadian dollars each. The offering is expected to generate gross proceeds of about 2.6 billion Canadian dollars.
The company plans to use the proceeds partly to fund the Tallgrass transaction and its previously announced acquisition of Salt Creek Midstream’s crude gathering business. It also wants to preserve flexibility for future growth.
Underwriters have an option to buy up to 15% more shares. If exercised in full, gross proceeds could rise to about 3 billion Canadian dollars. The offering is expected to close around Sept. 14.
Enbridge reaffirmed its medium-term outlook for roughly 5% compound annual growth in EBITDA, distributable cash flow per share and earnings per share. It also continues to target debt-to-adjusted EBITDA of 4.5 to 5 times.
CEO Transition Comes As Enbridge Expands
The deal follows Enbridge’s announcement Tuesday that President and CEO Greg Ebel will retire Dec. 31.
Michele Harradence, currently executive vice president and president of Gas Distribution and Storage, will become president and CEO and join the board on Jan. 1, 2027.
Harradence has led Enbridge’s gas utilities since 2022 and helped oversee the integration of the U.S. utility businesses acquired from Dominion Energy. Those assets helped build an integrated gas utility platform serving 7.2 million customers in Canada and the U.S.
The leadership change comes as Enbridge continues to expand its North American energy infrastructure portfolio across crude pipelines, natural gas transmission, utilities and renewable power.
ENB Price Action: Enbridge shares were down 2.79% at $48.74 during premarket trading on Thursday, according to Benzinga Pro data.
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