McCarthy Tétrault advises Enbridge on $19-billion for three US-based natural gas utilities

McCarthy Tétrault advised Enbridge on its $19-billion acquisition of three US-based natural gas distribution companies. Also in this week’s deals roundup are DLA Piper, Blakes, Osler, BLG, and Stikeman Elliot serving as legal counsel.

Enbridge to create North America’s largest natural gas utility with $19-billion M&A deal

Calgary-based pipeline firm Enbridge Inc. signed three separate agreements with US-based Dominion Energy, Inc. to acquire natural gas distribution companies The East Ohio Gas Company (EOG), Questar Gas Company (Questar Gas), and Public Service Company of North Carolina, Incorporated (PSNC), in a deal valued at $19 billion (US$14 billion). The acquisition comprises US$9.4 billion in cash, plus US$4.6 billion of assumed debt.

Upon deal completion, Enbridge's gas distribution and storage (GDS) business will be the largest, by volume, in North America with a combined rate base of over $27 billion.

McCarthy Tétrault LLP and Sullivan & Cromwell LLP are serving as Canadian and U.S. legal counsel, respectively, to Enbridge. Morgan Stanley & Co. LLC and RBC Capital Markets are acting as Enbridge’s financial advisors.

McGuireWoods LLP is serving as legal counsel to Dominion Energy. Citi and Goldman Sachs & Co. LLC are acting as co-financial advisors to Dominion Energy.

McGuireWoods LLP served as legal counsel to Dominion Energy. Citi and Goldman Sachs & Co. LLC acted as co-financial advisors for the transaction.

“Today and for the long-term, natural gas will remain essential for achieving North America's energy security, affordability and sustainability goals,” said Enbridge Executive Vice President and GDS President Michele Harradence. “Individually and collectively, the gas utilities are perfectly complementary to our gas distribution business unit's current operations and strategy. These utilities operate in regions with very attractive regulatory regimes, offer diverse, low-risk growth opportunities, and are capital efficient with short cycles between capital deployments and earnings generation.”

“The assets we are acquiring have long useful lives and natural gas utilities are 'must-have' infrastructure for providing safe, reliable and affordable energy,” said Enbridge President and CEO Greg Ebel. “In addition, these gas utilities have each committed to achieving net-zero greenhouse gas emissions by 2050 and are expected to play a critical role in enabling a sustainable energy transition.”

“We are delighted to be partnering with Enbridge who shares our ideals around employee engagement, regulatory transparency, local community investment, and exceptional customer service,” says Dominion Energy Chair, President, and CEO Robert M. Blue. “As one of the largest and most experienced operators of energy infrastructure assets in North America, Enbridge will be an outstanding steward of these businesses to the benefit of employees, customers, and communities alike.”

The deal is expected to close in 2024, subject to required federal and state regulatory approvals.

Vancouver-based royalty firms Nova, Metalla to merge in $190 million deal

Vancouver-based royalty companies Nova Royalty Corp. and Metalla Royalty & Streaming Ltd. entered into an agreement in which Metalla will acquire Nova for $190 million total equity value.

DLA Piper (Canada) LLP and DLA Piper LLP (US) are serving as legal counsel to Nova. Blake, Cassels & Graydon LLP is serving as legal counsel and PI Financial as financial advisor to the Nova Special Committee.

Osler, Hoskin & Harcourt LLP and Dorsey & Whitney LLP are serving as Canadian and U.S. legal counsel, respectively, to the Metalla Special Committee. Trinity Advisors is acting as financial advisor to the Metalla Board and the Special Committee, and BMO Capital Markets is acting as capital markets advisor to Metalla.

Metalla President and CEO Brett Heath said, “This merger represents a transformative moment for both companies and will lay a clear, low-risk path to becoming an intermediate royalty company. Together, we expect that our peer-leading, high-quality growth, underpinned by some of the best-in-class operators in the mining sector, will deliver superior long-term value for our shareholders.”

Nova Interim CEO Hashim Ahmed said, “We are excited to be combining with Metalla to create a truly special royalty company built on long-lived, top-quality assets. In addition to an attractive premium, a material ownership in the combined company provides Nova shareholders with increased scale, a stronger balance sheet, significantly improved cash flow profile in the short and near-term, and much greater trading liquidity and continued participation in the growth of the Nova assets.”

Upon deal completion, existing Metalla and Nova shareholders will own approximately 60 percent and 40 percent, respectively, of the combined company.

The deal is expected to be completed by the end of year 2023.

Agrinam to combine with US-based agricultural tech firm Freight Farms

Agrinam Acquisition Corporation signed a binding letter of intent for a proposed merger with Freight Farms, Inc., a US-based agricultural technology firm with over 600 modular farms sold across 40 countries.

The deal attributes the proposed combined business with an enterprise value of approximately $198 million (US$147 million).

Borden Ladner Gervais (BLG) LLP and Dorsey & Whitney LLP are serving as Canadian and U.S. legal counsel, respectively, to Agrinam.

Stikeman Elliott LLP and Latham & Watkins LLP are serving as Canadian and U.S. legal counsel, respectively, to Freight Farms.

“Agrinam was formed with the focused mission to identify and merge with a differentiated agribusiness company with a strong track record and a sustainable financial model and we believe we have found that with Freight Farms,” said Agrinam CEO Agustin Tristan Aldave. “In addition to the strength of the management team is the scalability of Freight Farms and how the platform allows for year-round production, low water consumption with 99 percent less water than conventional agriculture, and a contained growing environment preventing food safety issues. It also addresses global food security issues with farms in very remote areas with no access to water or crop production.”

“We believe the potential business combination with an exceptional partner in Agrinam will enable us to more aggressively scale our business to deliver sustainable, hyper-local food production to more customers across the world,” said Freight Farms CEO Rick Vanzura.  “We are very excited about the partnership with Agrinam to take our business to the next level.  Their understanding of the agtech space coupled with a focus on sustainability and efficient use of resources is closely aligned with our mission and values, making them the ideal partner.”

Definitive agreement regarding the proposed business combination is expected to be executed in the third quarter of 2023.