Stock Markets
Enbridge dives as market frets over financial hit from $14 billion Dominion deal
© Reuters. The logo of Calgary-based Enbridge, one of North America’s largest energy infrastructure companies, is displayed during the LNG 2023 energy trade show in Vancouver, British Columbia, Canada, July 12, 2023. REUTERS/Chris Helgren/File Photo
By Mrinalika Roy
(Reuters) – Enbridge (NYSE:) Inc shares tumbled nearly 7% to their lowest in more than four years on Wednesday, as some analysts questioned the financial impact of the Canadian pipeline operator’s surprise $14 billion bid to buy three utilities from Dominion Energy (NYSE:) doubling its gas distribution business.
The move to acquire East Ohio Gas, Questar Gas, and Public Service Co of North Carolina will make Enbridge the largest gas utility by volume in North America, with the unit accounting for a bit less than a fourth of the company’s overall business mix.
The deal is seen as a bet on the future of in a regulated market even as energy companies and consumers are transitioning to a greener future by phasing out fossil fuels.
But some analysts were surprised at the timing, the scale and impact such a deal would have on the company’s already leveraged balance sheet. Late on Tuesday, Moody’s (NYSE:) cut Enbridge’s outlook to negative.
“I do think the market was caught a bit off guard, as this wasn’t on my bingo card,” Morningstar analyst Stephen Ellis said. “Management had a realistic approach towards allocating capital, so a smaller transaction (perhaps a deeper investment in Canadian LNG?) would have been more expected,” Ellis said.
Enbridge struck the deal just over a month after CEO Greg Ebel told analysts the company saw ‘tuck-in’ acquisition opportunities ‘across the board’.
In a note, Ellis described the acquisition a “defensive move” and said despite the size of the deal Enbridge left its 5% annual EBITDA growth expectation over the medium term unchanged, which suggests that the earnings contribution is “replacing weaker results on the liquids side of the business.”
By late morning, Enbridge shares were down 5.5% at C$45.50, while the benchmark Canadian share index was off 0.5%. Rival TC Energy (NYSE:) was down 2.7%. Enbridge is selling new shares at a discount of 7.2% to its Tuesday close to part-fund the transaction.
“While Enbridge paid a reasonable price, high leverage and funding gap could act as overhang,” Wells Fargo analysts said in a note.
The transaction deploys some of company’s near term balance sheet capacity and hence the company will be even more selective on how it deploys remaining investment capacity, the note added.
In July, rival TC Energy said it would focus on transporting natural gas, as it announced the split of the business into two listed companies, saying they would be more valuable apart.
Stock Markets
Insight Partners closes in on new $10 billion fund, FT reports
(Reuters) -Private equity firm Insight Partners is on the brink of closing a new $10 billion-plus fund, roughly half the amount originally targeted, the Financial Times reported on Sunday, citing five people with knowledge of its plans.
Insight will not formally close its 13th fund until early next year, the report said, adding that the final figure may be closer to $12 billion.
Insight Partners declined to comment on the report.
The report said Insight is using a private equity-style structure to sell more than $1 billion worth of stakes in start-ups and to free up cash to return to investors.
One of the start-ups is Israeli cybersecurity firm Wiz, which had called off a $23 billion deal with Google parent Alphabet (NASDAQ:) in July, the report said.
New York-based Insight raised $20 billion for its 12th flagship fund in 2022, aiming to ramp up investments in software and technology companies.
Stock Markets
Houthi missile reaches central Israel for first time, no injuries reported
JERUSALEM (Reuters) -Prime Minister Benjamin Netanyahu said Israel would inflict a “heavy price” on the Iran-aligned Houthis who control northern Yemen, after they reached central Israel with a missile on Sunday for the first time.
Houthi military spokesman Yahya Sarea said the group struck with a new hypersonic ballistic missile that travelled 2,040 km (1270 miles) in just 11 1/2 minutes.
After initially saying the missile had fallen in an open area, Israel’s military later said it had probably fragmented in the air, and that pieces of interceptors had landed in fields and near a railway station. Nobody was reported hurt.
Air raid sirens had sounded in Tel Aviv and across central Israel moments before the impact at around 6:35 a.m. local time (0335 GMT), sending residents running for shelter. Loud booms were heard.
Reuters saw smoke billowing in an open field in central Israel.
At a weekly cabinet meeting, Netanyahu said the Houthis should have known that Israel would exact a “heavy price” for attacks on Israel.
“Whoever needs a reminder of that is invited to visit the Hodeida port,” Netanyahu said, referring to an Israeli retaliatory air strike against Yemen in July for a Houthi drone that hit Tel Aviv.
The Houthis have fired missiles and drones at Israel repeatedly in what they say is solidarity with the Palestinians, since the Gaza war began with a Hamas attack on Israel in October.
The drone that hit Tel Aviv for the first time in July killed a man and wounded four people. Israeli air strikes in response on Houthi military targets near the port of Hodeidah killed six and wounded 80.
Previously, Houthi missiles have not penetrated deep into Israeli air space, with the only one reported to have hit Israeli territory falling in an open area near the Red Sea port of Eilat in March.
Israel should expect more strikes in the future “as we approach the first anniversary of the Oct. 7 operation, including responding to its aggression on the city of Hodeidah,” Sarea said.
The deputy head of the Houthi’s media office, Nasruddin Amer, said in a post on X on Sunday that the missile had reached Israel after “20 missiles failed to intercept” it, describing it as the “beginning”.
The Israeli military also said that 40 projectiles were fired towards Israel from Lebanon on Sunday and were either intercepted or landed in open areas.
“No injuries were reported,” the military said.
Stock Markets
Eight die in Channel crossing attempt, French authorities say
PARIS (Reuters) – Eight people have died trying to cross the Channel from France to England, French authorities said on Sunday, confirming earlier media reports.
This latest incident follows the deaths of 12 people earlier this month when their boat capsized in the Channel on its way to Britain and highlights the pressure on the British and French governments to find ways to tackle the boat crossings.
Jacques Billant, the Prefect of the Pas-de-Calais region, said that rescue crews were alerted that a boat with 59 people onboard was in difficulty in waters off the coast of Ambleteuse in the Pas-de-Calais area.
“A new drama took place around one in the morning and we deplore the death of eight people,” he told a news conference, adding that the other 51 onboard were now in the care of rescue and medical crews.
The dead were men from Eritrea, Sudan, Syria, Egypt, Iran and Afghanistan, he added.
The Channel is one of the world’s busiest shipping lanes and currents are strong, which makes crossing on small boats dangerous.
The latest incident brings to 46 the number of people who have died trying to cross the Channel from France since the start of the year, Billant said.
On September 14 alone there were eight attempts to cross the Channel from France and some 200 migrants were rescued, he said.
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