Enbridge: Adds Three U.S. Gas Distribution Utilities in Defensive Move

Enbridge is acquiring East Ohio Gas Company, Public Service Company of North Carolina, and Questar Gas natural gas distribution utilities for CAD 19 billion (USD 14 billion), including USD 4.6 billion in debt from Dominion Energy. Separately, Enbridge announced it plans to issue CAD 4 billion in shares to help fund the deal. The transaction implies a 16.6 times 2024 earnings multiple and 1.5 times rate base, which is in line with natural gas distribution utility market valuations, and we think it implies a fair deal for Enbridge. We do not expect to change our CAD 52 per share (USD 39) fair value estimate or narrow moat rating.