Energy giant Enbridge (TSE:ENB) (NYSE:ENB) has been working on the acquisition of Questar for some time now, and the latest reports note that the deal has concluded. Questar is now part of Enbridge, but investors seem a little less than pleased about the whole situation. In fact, Enbridge is down fractionally in Monday morning’s trading following the deal’s conclusion.
Reports noted that Enbridge pulled off quite a coup in landing Questar. With this acquisition, valued at around C$2.5 billion, Enbridge now has an enhanced position in the United States since Questar operates in Idaho, Utah, and Wyoming. That gives Enbridge access to three critical U.S. markets where there was a brisk demand for natural gas.
Since there’s also a rising demand for natural gas in U.S. utilities, which increasingly turn to the stuff for electrical generation against the former favorite, coal, that gives Enbridge a whole new presence in the utility sector. In addition, Enbridge landed the Wexpro companies that operated under Questar, which were engaged in natural gas production.
Meanwhile, Back at Line 5
The acquisition comes at a good time for Enbridge, as it’s facing troubles in the northern United States over its Line 5 pipeline. It’s now working to reroute the pipeline around the reservation held by the Bad River Band of Lake Superior Chippewas, but a lack of timely permit issuance has left the project hamstrung for now. This is despite the fact that the project has been known of and trying to get started for the last 10 years.
Is Enbridge a Buy or Hold?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on ENB stock based on four Buys, five Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 6.8% rally in its share price over the past year, the average ENB price target of C$53.15 per share implies 6.88% upside potential.
