Oil & Gas - Energy - Commodities - Resources (OILBRENT)

[eFinanceMarkets]

SEP Spectra Energy Partners (NYSE:SEP) tumbled more than 3% in today's trade following Enbridge's (NYSE:ENB) non-binding offer to acquire the ~17% of SEP it does not already own, in a deal that included no premium.

It's "a disappointing outcome for SEP unitholders," says Jefferies analyst Christopher Sighinolfi, adding that it is rare to see an all-stock, no premium deal.

While Sighinolfi agrees the ENB restructuring plan - which also includes three other sponsored units - will simplify its corporate structure and perhaps mitigate some risks, the move marks a sharp reversal from the company's previous comments about the impact of the FERC's reversal of previous policy that allowed MLP oil and gas pipelines to include an income tax allowance in their cost-of-service rates.

Tudor Pickering Holt also endorses the plan, saying it will give ENB $500M/year more cash to invest in growth projects or pay down debt, which is considerable after its $28B takeover of Spectra Energy Corp. in 2016.