Proxy Statement - Merger or Acquistion (definitive) (defm14a)

Date : 11/09/2018 @ 4:34PM
Source : Edgar (US Regulatory)
Stock : Enbridge Energy, L.P. Class A Common Units (EEP)
Quote : 10.84  0.07 (0.65%) @ 2:54PM

Proxy Statement - Merger or Acquistion (definitive) (defm14a)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

(RULE 14a-101)

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

 

Filed by the Registrant  ☒                             Filed by a Party other than the Registrant  ☐

Check the appropriate box:

 

  Preliminary Proxy Statement
  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material Pursuant to §240.14a-12

ENBRIDGE ENERGY PARTNERS, L.P.

(Name of Registrant as Specified In Its Charter)

Payment of Filing Fee (Check the appropriate box):

  No fee required.
  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
  (1)  

Title of each class of securities to which transaction applies:

 

N/A

  (2)  

Aggregate number of securities to which transaction applies:

 

N/A

  (3)  

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

N/A

  (4)  

Proposed maximum aggregate value of transaction:

 

N/A

  (5)  

Total fee paid:

 

N/A

  Fee paid previously with preliminary materials.
  Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
  (1)  

Amount Previously Paid:

 

N/A

  (2)  

Form, Schedule or Registration Statement No.:

 

N/A

  (3)  

Filing Party:

 

N/A

  (4)  

Date Filed:

 

N/A

 

 

 


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ENBRIDGE ENERGY PARTNERS, L.P.

MERGER PROPOSAL—YOUR VOTE IS VERY IMPORTANT

November 9, 2018

To the Unitholders of Enbridge Energy Partners, L.P.:

On September 17, 2018, Enbridge Energy Partners, L.P., which is referred to as “EEP”, entered into an Agreement and Plan of Merger (which, as may be amended from time to time, is referred to as the “Merger Agreement”) with the general partner of EEP, which is Enbridge Energy Company, Inc. (the “General Partner”), Enbridge Energy Management, L.L.C., which is the delegate of the General Partner (the “GP Delegate” or “EEQ”), Enbridge Inc. (“Enbridge”), Enbridge (U.S.) Inc., Winter Acquisition Sub II, LLC (“Merger Sub”) and, solely for the purposes of Article I, Article II and Article XI therein, Enbridge US Holdings Inc. The Merger Agreement provides that Merger Sub will be merged with and into EEP, with EEP being the surviving entity and becoming an indirect wholly owned subsidiary of Enbridge (the “Merger”). As a result of the Merger, Enbridge will acquire indirectly all of the outstanding Class A common units representing limited partner interests in EEP (the “Class A common units”) that Enbridge and its subsidiaries do not already own.

A special committee composed of independent members of the board of directors of the GP Delegate, which is referred to as the “Special Committee”, the board of directors of the GP Delegate, which is referred to as the “GP Delegate Board”, and the board of directors of the General Partner, which is referred to as the “GP Board”, each have determined that the Merger is fair and reasonable to EEP, including the holders of the outstanding units of EEP (other than Enbridge and its affiliates), and have approved the Merger Agreement and the Merger. The approval of the Merger Agreement and the Merger by EEP requires the affirmative vote of (1) the holders of at least 66 2 3 % of the outstanding EEP units (excluding the Class F units of EEP), and (2) the holders of a majority of the outstanding Class A common units (other than any Class A common units held by Enbridge and its affiliates) and the outstanding i-units (other than i-units voted at the direction of Enbridge and its affiliates), voting together as a single class, in each case entitled to vote on such matter at the special meeting or any adjournment or postponement thereof.

If the Merger is successfully completed, each outstanding Class A common unit not owned by Enbridge or any of its subsidiaries will be converted into the right to receive 0.335 of an Enbridge common share, which common shares are referred to as “Enbridge common shares” and such exchange ratio is referred to as the “Exchange Ratio”. Based on the number of Enbridge common shares and Class A common units that are outstanding as of November 5, 2018 (other than any Class A common units owned by Enbridge or its subsidiaries), the number of Enbridge common shares issued in exchange for Class A units as a result of the proposed Merger would represent approximately 4.0% of the Enbridge common shares outstanding (or approximately 3.6% if the proposed Merger and the Other Merger Transactions were successfully completed, based on the number of Enbridge common shares expected to be issued in the proposed Merger and the Other Merger Transactions (as defined and described below) in accordance with the respective transaction agreements, and the number of outstanding Enbridge common shares and outstanding shares or units, as the case may be, of each of EEP, EEQ, SEP and ENF (each of SEP and ENF, as defined below), as of November 5, 2018). The actual number of Enbridge common shares issued in the Merger will be determined by multiplying the Exchange Ratio by the number of issued and outstanding Class A common units held by Unaffiliated EEP Unitholders as of the closing date of the Merger. The actual number of Enbridge common shares issued in each of the Other Merger Transactions will be determined by multiplying the applicable exchange ratio by the number of publicly held shares or units of the acquired entity as of the closing date of each such transaction.

Enbridge has also entered into definitive agreements to acquire, in separate combination transactions, all of the outstanding equity securities that Enbridge does not already own of (1) the GP Delegate, (2) Spectra Energy Partners, LP (“SEP”), and (3) Enbridge Income Fund Holdings Inc. (“ENF”), which transactions are referred to separately as the “EEQ merger”, the “SEP merger” and the “ENF plan of arrangement”, respectively, and collectively as the “Other Merger Transactions”.


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EEQ will hold a special meeting of its shareholders to obtain their approval of the applicable merger agreement. Completion of the EEQ merger is contingent on the completion of the Merger, while none of the Merger or the SEP merger are conditioned on the completion of any of the Other Merger Transactions. SEP will solicit consents in order to obtain the requisite approval of the SEP unitholders. The consents of Enbridge and its subsidiaries (other than SEP) to the SEP merger are sufficient to approve the SEP merger and the related merger agreement. On November 8, 2018, Enbridge and ENF completed the previously announced ENF plan of arrangement pursuant to Section 193 of the Business Corporations Act (Alberta).

We are holding a special meeting of EEP unitholders on December 17, 2018 at 10:00 a.m., local time, at the Hilton Houston Post Oak by the Galleria, 2001 Post Oak Boulevard, Houston, Texas 77056, to obtain your vote to approve the Merger Agreement. Your vote is very important, regardless of the number of EEP units that you own. The Merger cannot be completed unless two -thirds of the outstanding EEP units (excluding the Class  F units of EEP) and a majority of the outstanding Class  A common units and i-units (other than Class  A common units held by or i-units voted at the direction of Enbridge and its affiliates, and voting as a single class) are voted for the approval of the Merger Agreement at the special meeting. Therefore, your failure to vote your EEP units will have the same effect as a vote against approval of the Merger Agreement.

The Special Committee, the GP Delegate Board and the GP Board each recommend that EEP unitholders vote FOR the approval of the Merger Agreement, and the GP Delegate Board and the GP Board each recommend that EEP unitholders vote FOR the adjournment of the special meeting from time to time if necessary to solicit additional proxies if there are not sufficient votes to approve the Merger Agreement at the time of the special meeting.

The Class A common units are traded on the New York Stock Exchange (the “NYSE”) under the symbol “EEP”, and the Enbridge common shares are traded on the NYSE and the Toronto Stock Exchange (the “TSX”) under the symbol “ENB”. The last reported sale price of Enbridge common shares on the NYSE on November 8, 2018, was US$32.90. The last reported sale price of the Class A common units on the NYSE on November 8, 2018, was US$10.76.

On behalf of the GP Board, I invite you to attend the special meeting. Whether or not you expect to attend the special meeting in person, we urge you to submit your proxy as promptly as possible through one of the delivery methods described in the accompanying proxy statement/prospectus.

In addition, we urge you to read carefully the accompanying proxy statement/prospectus (and the documents incorporated by reference into it), which includes important information about the Merger Agreement, the proposed Merger, the Other Merger Transactions and the special meeting. Please pay particular attention to the section titled “ Risk Factors ” beginning on page 33 of the accompanying proxy statement/prospectus.

On behalf of the GP Board, thank you for your continued support.

Sincerely,

 

LOGO

Jeffrey A. Connelly

Chairman of the Board of Directors

Enbridge Energy Company, Inc., as the general

partner of Enbridge Energy Partners, L.P.


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NEITHER THE U.S. SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE MERGER, THE APPROVAL OF THE MERGER AGREEMENT, THE ISSUANCE OF ENBRIDGE COMMON SHARES IN CONNECTION WITH THE MERGER OR ANY OTHER MERGER TRANSACTIONS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS, OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The enforcement by investors of civil liabilities under United States federal securities laws may be affected adversely by the fact that Enbridge is incorporated under the laws of Canada, that at certain points in time, most of its officers and directors may be residents of Canada, that some of the experts named in the accompanying proxy statement/prospectus are residents of Canada, and that all or a substantial portion of the assets of Enbridge and said persons are located outside the United States.

The accompanying proxy statement/prospectus is dated November 9, 2018, and is first being mailed to EEP unitholders on or about November 13, 2018.


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ENBRIDGE ENERGY PARTNERS, L.P.

5400 Westheimer Court

Houston, Texas 77056

NOTICE OF SPECIAL MEETING OF UNITHOLDERS

To the Unitholders of Enbridge Energy Partners, L.P.:

Notice is hereby given that a special meeting of unitholders of Enbridge Energy Partners, L.P., a Delaware limited partnership, which is referred to as “EEP”, will be held on December 17, 2018 at 10:00 a.m., local time, at the Hilton Houston Post Oak by the Galleria, 2001 Post Oak Boulevard, Houston, Texas 77056, solely for the following purposes:

 

   

Proposal  1 : To consider and vote on a proposal to approve the Agreement and Plan of Merger, dated as of September 17, 2018 (as it may be amended from time to time, the “Merger Agreement”), entered into by and among Enbridge Energy Partners, L.P. (“EEP”), Enbridge Energy Company, Inc. (the “General Partner”), Enbridge Energy Management, L.L.C. (the “GP Delegate”), Enbridge Inc. (“Enbridge”), Enbridge (U.S.) Inc., Winter Acquisition Sub II, LLC (“Merger Sub”) and, solely for purposes of Article I, Article II and Article XI therein, Enbridge US Holdings Inc.; and

 

   

Proposal  2 : To consider and vote on a proposal to approve the adjournment of the special meeting from time to time, if necessary to solicit additional proxies if there are not sufficient votes to approve the Merger Agreement at the time of the special meeting.

These items of business, including the Merger Agreement and the proposed Merger, are described in detail in the accompanying proxy statement/prospectus.

A special committee composed of independent members of the board of directors of the GP Delegate, which is referred to as the “Special Committee”, the board of directors of the GP Delegate, which is referred to as the “GP Delegate Board”, and the board of directors of the General Partner, which is referred to as the “GP Board”, each have, acting in good faith, determined that the Merger is fair and reasonable to EEP, including the holders of the outstanding units of EEP (other than Enbridge and its affiliates), have approved the Merger Agreement and the Merger and recommend that the EEP unitholders vote FOR the proposal to approve the Merger Agreement, and the GP Delegate Board and the GP Board each recommend that EEP unitholders vote FOR the adjournment of the special meeting from time to time if necessary to solicit additional proxies in favor of such approval.

Only EEP unitholders of record as of the close of business on November 5, 2018 are entitled to notice of the special meeting and to vote at the special meeting or at any adjournment or postponement thereof. A list of EEP unitholders entitled to vote at the special meeting will be available in EEP’s offices located at 5400 Westheimer Court, Houston, Texas 77056, during regular business hours for a period of ten days before the special meeting, and at the place of the special meeting during the meeting.

YOUR VOTE IS VERY IMPORTANT!

Approval of the Merger Agreement by the holders of the EEP units (other than the Class F units of EEP, the “Outstanding EEP units”) is a condition to the consummation of the Merger and requires the affirmative vote of (1) the holders of at least 66 2 3 % of the Outstanding EEP units, and (2) the holders of a majority of the outstanding Class A common units (other than any Class A common units held by Enbridge and its affiliates) and the outstanding i-units (other than i-units voted at the direction of Enbridge and its affiliates), voting together as a single class, in each case entitled to vote on such matter at the special meeting or any adjournment or postponement thereof. Therefore, your vote is very important. Your failure to vote your EEP units will have the same effect as a vote against the approval of the Merger Agreement. WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING IN PERSON, WE URGE YOU TO SUBMIT YOUR PROXY AS PROMPTLY AS POSSIBLE (1)  THROUGH THE INTERNET, (2)  BY TELEPHONE OR (3)  BY MARKING, SIGNING AND DATING THE ENCLOSED PROXY CARD AND RETURNING IT IN THE POSTAGE-PAID ENVELOPE PROVIDED. You may revoke your proxy or change your vote at any


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time by 11:59 p.m., Eastern Time, on the day before the special meeting. If your EEP units are held in the name of a bank, broker, nominee, trust company or other fiduciary, please follow the instructions on the voting instruction card furnished to you by them.

We urge you to carefully read the accompanying proxy statement/prospectus, including all documents incorporated by reference into it, and its annexes before voting your EEP units at the special meeting or submitting your voting instructions by proxy.

IF YOU PLAN TO ATTEND THE SPECIAL MEETING:

Please note that space limitations make it necessary to limit attendance to EEP unitholders. Admission to the special meeting will be on a first-come, first-served basis. Registration will begin at 9:00 a.m., local time, and seating will begin at 9:30 a.m., local time. EEP unitholders will be asked to present valid picture identification, such as a driver’s license or passport. EEP unitholders holding Class A common units in brokerage accounts will also need to bring a copy of the voting instruction card that they receive from their broker or other nominee in connection with the special meeting or a brokerage statement reflecting unit ownership as of the record date. Cameras, recording devices and other electronic devices will not be permitted at the special meeting.

By order of the board of directors,

 

LOGO

Jeffrey A. Connelly

Chairman of the Board of Directors

Enbridge Energy Company, Inc., as the general

partner of Enbridge Energy Partners, L.P.

Houston, Texas

November 9, 2018


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ADDITIONAL INFORMATION

This proxy statement/prospectus incorporates important business and financial information about Enbridge and EEP from other documents that Enbridge and EEP have filed with the U.S. Securities and Exchange Commission, which is referred to as the “SEC”, and that are contained in or incorporated by reference herein. For a listing of documents incorporated by reference herein, please see the section titled “ Where You Can Find More Information ” beginning on page 166 of this proxy statement/prospectus. This information is available for you to review through the SEC’s website at www.sec.gov .

You will also be able to obtain copies of documents filed by Enbridge with the SEC from Enbridge’s website at https://www.enbridge.com / under the “Investment Center” link and then under the heading “Reports and SEC Filings” or copies of documents filed by EEP with the SEC by accessing EEP’s website at https://www.enbridgepartners.com / under the “Investor Relations” link, and then under the heading “Financial Information”. The information contained on either of Enbridge’s or EEP’s respective websites is not incorporated into this proxy statement/prospectus and is not a part of this proxy statement/prospectus.

You may request copies of this proxy statement/prospectus and any of the documents incorporated by reference herein or other information concerning Enbridge or EEP, without charge, upon written or oral request to the applicable company’s principal executive offices. The respective addresses and telephone numbers of such principal executive offices are listed below.

 

Enbridge Energy Partners, L.P.    Enbridge Inc.
5400 Westheimer Court
Houston, Texas 77056
Attention: Corporate Secretary
Telephone: 1-800-481-2804
   200, 425 - 1st Street S.W.
Calgary, Alberta T2P 3L8, Canada
Attention: Investor Relations
Telephone: 1-800-481-2804

In addition, if you have questions about the Merger or the special meeting, need additional copies of this proxy statement/prospectus or need to obtain proxy cards or other information related to the proxy solicitation, you may contact D.F. King & Co., Inc., EEP’s proxy solicitor, at the address and telephone numbers listed below. You will not be charged for any of these documents that you request.

D.F. King & Co., Inc.

48 Wall Street, 22nd Floor

New York, NY 10005

Banks and Brokers call: (212) 269-5550

All others call toll-free: (800) 549-6746

Email: Enbridge@dfking.com

To obtain timely delivery of these documents prior to the special meeting, holders of EEP units must request the information no later than December 10, 2018 (which is five business days before the date of the special meeting) in order to receive them before the special meeting.

ABOUT THIS PROXY STATEMENT/PROSPECTUS

This proxy statement/prospectus, which forms part of a registration statement on Form S-4 filed with the SEC by Enbridge (File No. 333-227767), constitutes a prospectus of Enbridge under Section 5 of the Securities Act of 1933, as amended (the “Securities Act”), with respect to the Enbridge common shares to be issued to holders of Class A common units pursuant to the Merger Agreement.

This proxy statement/prospectus also constitutes a notice of meeting and a proxy statement of EEP under Section 14(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), with respect to the special meeting of EEP unitholders, which is referred to as the “special meeting”, at which EEP unitholders will be asked to consider and vote on, among other matters, a proposal to approve the Merger Agreement.


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We are responsible for the information contained in, and incorporated by reference into, this proxy statement/prospectus. We have not authorized anyone to give you any other information, and we take no responsibility for any other information that others may give you. You should bear in mind that although the information contained in, or incorporated by reference into, this proxy statement/prospectus is intended to be accurate as of the date on the front of such documents, such information may also be amended, supplemented or updated by the subsequent filing of additional documents deemed by law to be or otherwise incorporated by reference into this proxy statement/prospectus. Enbridge’s and EEP’s business, financial condition, results of operations and prospects may have changed since those dates.

This proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction in which it is unlawful to make any such offer or solicitation.

Enbridge and EEP have both contributed to the information contained in this proxy statement/prospectus. The information concerning Enbridge contained in, or incorporated by reference into, this proxy statement/prospectus has been provided by Enbridge, and information concerning EEP contained in, or incorporated by reference into, this proxy statement/prospectus has been provided by EEP.

Unless otherwise specified, currency amounts referenced in this proxy statement/prospectus are in U.S. dollars.


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CURRENCY EXCHANGE RATE DATA

The following table shows, for the years and dates indicated, certain information regarding the Canadian dollar/U.S. dollar exchange rate. The information is based on the daily exchange rate as reported by the Bank of Canada. Such exchange rate on November 1, 2018 was C$1.3088 = US$1.00.

 

     Period End      Average      Low      High  

Year ended December 31,

(C$ per US$)

           

2017

     1.2545        1.2986        1.2128        1.3743  

2016

     1.3427        1.3248        1.2544        1.4589  

2015

     1.3840        1.2787        1.1728        1.3990  

2014

     1.1601        1.1045        1.0614        1.1643  

2013

     1.0636        1.0299        0.9839        1.0697  

 

     Low      High  

Month ended,

(C$ per US$)

     

November 2018 (through November 1, 2018)

     1.3088        1.3088  

October 2018

     1.2803        1.3142  

September 2018

     1.2905        1.3188  

August 2018

     1.2917        1.3152  

July 2018

     1.3017        1.3255  

June 2018

     1.2913        1.3310  

May 2018

     1.2775        1.3020  

 

Source:

Bank of Canada website. Exchange rates prior to 2017 in the tables above represent daily noon rates. Due to a change in calculation methodology of the rates published by the Bank of Canada, the exchange rates for 2017 onward represent daily average exchange rates.


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FREQUENTLY USED TERMS

This proxy statement/prospectus generally does not use technical defined terms, but a few frequently used terms may be helpful for you to have in mind at the outset. Unless otherwise specified or if the context so requires, the following terms have the meanings set forth below for purposes of this proxy statement/prospectus:

“Canadian Tax Act” refers to the Income Tax Act (Canada), including the regulations promulgated thereunder, as amended from time to time.

“Class A common units” refers to the Class A common units representing limited partner interests in EEP.

“Class B common units” refers to the Class B common units representing limited partner interests in EEP. All outstanding Class B common units are held by the General Partner and have similar rights to the Class A common units, except with respect to certain allocations of taxable income. Class B common units are not publicly traded.

“Class E units” refers to the Class E units representing limited partner interests in EEP, all of which are held by the General Partner. There is no established public trading market for the Class E units.

“Class F units” refers to the Class F units representing limited partner interests in EEP, all of which are held by the General Partner. There is no established public trading market for the Class F units.

“Closing Date” refers to the date on which the Merger is completed.

“EEP” refers to Enbridge Energy Partners, L.P., a publicly-traded Delaware limited partnership.

“EEP Partnership Agreement” refers to the Eighth Amended and Restated Agreement of Limited Partnership of EEP, dated as of April 27, 2017, as amended.

“EEP unitholders” refers to holders of any EEP unit.

“EEP units” refers to the Class A common units, the Class B common units, the Class E units, the Class F units and the i-units of EEP.

“Effective Time” refers to the time on the Closing Date at which the Merger becomes effective as specified in the certificate of merger of EEP and Merger Sub to be filed with the Secretary of State of the State of Delaware.

“Enbridge” refers to Enbridge Inc., a Canadian corporation.

“Enbridge shareholders” refers to the holders of Enbridge common shares.

“Exchange Ratio” refers to 0.335 of a validly issued, fully paid and non-assessable Enbridge common share for each Class A common unit.

“Excluded Units” refers to Class A common units owned by Enbridge, the General Partner, Merger Sub or any other direct or indirect wholly owned subsidiary of Enbridge and Class A common units owned by the General Partner, the GP Delegate or EEP or any direct or indirect wholly owned subsidiary of EEP, and in each case not held on behalf of third parties.

“General Partner” refers to Enbridge Energy Company, Inc., a Delaware corporation and the general partner of EEP.

“GP Delegate” or “EEQ” refers to Enbridge Energy Management, L.L.C., a Delaware limited liability company and the delegate of the General Partner.

“i-unit” refers to the i-units representing limited partner interests of EEP. All i-units are owned by the GP Delegate and the i-units are not publicly traded.


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“Majority of the Minority Vote” refers to the approval of the Merger Agreement by the holders of a majority of the outstanding Class A common units (other than Class A common units held by Enbridge and its affiliates) and the outstanding i-units (other than i-units voted at the direction of Enbridge and its affiliates), entitled to vote on such matter at the special meeting or any adjournment or postponement thereof, voting together as a single class.

“Merger” refers to the proposed merger of Merger Sub with and into EEP, pursuant to which EEP will survive the merger as an indirect wholly owned subsidiary of Enbridge.

“Merger Agreement” refers to the Agreement and Plan of Merger, dated as of September 17, 2018, entered into by and among EEP, the General Partner, the GP Delegate, Enbridge, Enbridge (U.S.) Inc., Merger Sub and, solely for purposes of Article I, Article II and Article XI therein, Enbridge US Holdings Inc.

“Merger Consideration” refers to the conversion of each issued and outstanding Class A common unit immediately prior to the Effective Time (other than the Excluded Units) into the right to receive 0.335 of a validly issued, fully paid and non-assessable Enbridge common share.

“Merger Sub” refers to Winter Acquisition Sub II, LLC, a Delaware limited liability company and an indirect wholly owned subsidiary of Enbridge.

“Midcoast Transaction” refers to the sale by Enbridge (U.S.) Inc., an indirect subsidiary of Enbridge, of Midcoast Operating, L.P. and its subsidiaries (collectively, “Midcoast”) to AL Midcoast Holdings, LLC for cash proceeds of approximately US$1.1 billion less deposits and other customary closing items, as disclosed in Enbridge’s Current Report on Form 8-K, filed with the SEC on August 1, 2018.

“Outstanding EEP units” refers to the EEP units, excluding the Class F units of EEP. Holders of Outstanding EEP units are entitled to vote at the special meeting.

“Record Date” refers to the close of business in New York, New York on November 5, 2018.

“special meeting” refers to the special meeting of the holders of outstanding EEP units to be held on December 17, 2018.

“Treaty” refers to the Canada-United States Income Tax Convention (1980).

“Unaffiliated EEP Unitholders” refers to the holders of Outstanding EEP units, other than Enbridge and its affiliates.


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TABLE OF CONTENTS

 

QUESTIONS AND ANSWERS

     1  

SUMMARY

     9  

Information about the Companies

     9  

The Merger and the Merger Agreement

     10  

Relationship of the Parties to the Merger Agreement

     10  

Merger Consideration

     11  

Required Approval by the EEP Unitholders

     11  

Recommendation of the Special Committee, GP Delegate Board and the GP Board

     11  

Reasons for the Recommendation of the Special Committee

     12  

Opinion of Evercore—Financial Advisor to the Special Committee

     12  

The Special Meeting

     13  

No Enbridge Shareholder Approval Required

     14  

Conditions to the Completion of the Merger

     14  

Termination

     14  

No Dissenters’ or Appraisal Rights

     15  

Regulatory Approvals

     15  

Litigation and Regulatory Reviews/Investigations Related to the Merger

     15  

Security Ownership of Certain Beneficial Owners of EEP

     16  

Interests of Directors and Executive Officers of the GP Delegate and General Partner in the Merger

     16  

Material U.S. Federal Income Tax Consequences of the Merger

     17  

Material Canadian Federal Income Tax Consequences of the Merger

     18  

Listing of Enbridge Common Shares

     18  

Delisting and Deregistration of the Class A Common Units

     18  

Comparison of Rights of Enbridge Shareholders and EEP Unitholders

     18  

The Other Merger Transactions

     18  

Risk Factors

     19  

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF ENBRIDGE

     20  

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF EEP

     22  

SELECTED UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

     24  

COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE AND PER UNIT FINANCIAL INFORMATION

     25  

COMPARATIVE SHARE AND UNIT PRICES; DIVIDENDS AND DISTRIBUTIONS

     27  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     30  

 

-i-


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RISK FACTORS

     33  

Risks Related to the Merger

     33  

Risks Related to the Enbridge Common Shares

     38  

Tax Risks Related to the Merger and the Ownership of Enbridge Common Shares Received in the Merger

     40  

Risks Related to Enbridge’s Business

     42  

Risks Related to EEP’s Business

     42  

INFORMATION ABOUT THE COMPANIES

     43  

Enbridge Inc.

     43  

Enbridge Energy Partners, L.P.

     43  

Merger Sub

     44  

Other Merger Transactions

     44  

THE SPECIAL MEETING

     45  

Date, Time and Place

     45  

Purpose

     45  

Special Committee Recommendation

     45  

The GP Delegate Board and the GP Board Recommendation

     45  

Record Date; Outstanding EEP Units; Units Entitled to Vote

     46  

Quorum

     46  

Required Vote

     46  

Unit Ownership of and Voting by Enbridge and the General Partner’s and GP Delegate’s Directors and Executive Officers

     46  

Voting of Units by Holders of Record

     47  

Voting of Units Held in Street Name

     47  

Revocability of Proxies; Changing Your Vote

     48  

Solicitation of Proxies

     48  

Householding

     48  

Adjournments

     49  

Attending the Special Meeting

     49  

Assistance

     49  

PROPOSAL 1: THE MERGER PROPOSAL

     50  

Required Vote

     50  

Vote Recommendation

     50  

PROPOSAL 2: THE ADJOURNMENT PROPOSAL

     51  

Required Vote

     51  

Vote Recommendation

     51  

 

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THE MERGER

     52  

Transaction Structure

     52  

Merger Consideration

     52  

Background of the Merger

     52  

Recommendation of the Special Committee

     72  

Recommendation of the GP Delegate Board

     72  

Recommendation of the GP Board

     72  

Reasons for the Recommendation of the Special Committee

     72  

Opinion of Evercore—Financial Advisor to the Special Committee

     78  

Unaudited Financial Projections of Enbridge and EEP

     90  

Reasons of the Enbridge Board for the Merger

     94  

Regulatory Approvals

     94  

Litigation and Regulatory Reviews/Investigations Related to the Merger

     95  

Relationship of the Parties to the Merger Agreement

     96  

Interests of Directors and Executive Officers of the GP Delegate and the General Partner in the Merger

     96  

Indemnification and Insurance

     98  

Listing of Enbridge Common Shares

     99  

Delisting and Deregistration of the Class A Common Units

     99  

Required Approval by the EEP Unitholders

     99  

No Dissenters’ or Appraisal Rights

     99  

No Enbridge Shareholder Approval Required

     99  

Accounting Treatment of the Merger

     99  

THE MERGER AGREEMENT

     100  

Explanatory Note Regarding the Merger Agreement

     100  

The Merger

     100  

Closing and Effective Time of the Merger

     100  

Amendment of the Partnership Agreement

     101  

Organizational Documents of the Surviving Entity

     101  

Merger Consideration

     101  

Pre-Merger Subscriptions

     102  

United States Federal Income Tax Treatment of the Merger

     102  

Exchange Procedures

     102  

Distributions with Respect to Unsurrendered Certificates

     104  

Termination of the Exchange Fund

     104  

Lost, Stolen or Destroyed Certificates

     104  

 

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Withholding Rights

     105  

Adjustments to Prevent Dilution

     105  

No Dissenters’ Rights

     105  

Representations and Warranties

     105  

Interim Operations

     109  

Change in Recommendation

     111  

Prospectus/Proxy Filing; Information Supplied

     113  

Unitholders Meeting

     114  

Cooperation; Efforts to Consummate

     114  

Stock Exchange Listing and Delisting

     115  

Expenses

     115  

Indemnification; Directors’ and Officers’ Insurance

     116  

Distributions

     117  

Transaction Litigation

     117  

Voting

     117  

Special Committee

     118  

Performance by General Partner

     118  

Conditions to the Completion of the Merger

     118  

Termination

     120  

Payment of EEP Expenses

     121  

Modification or Amendment

     121  

Waiver of Conditions

     121  

MATERIAL CANADIAN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

     122  

In General

     122  

Holders Not Resident in Canada

     123  

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

     125  

Certain U.S. Federal Income Tax Consequences of the Merger to U.S. Holders of Class A Common Units

     126  

Certain U.S. Federal Income Tax Consequences of Owning and Disposing of Enbridge Common Shares Received in the Merger

     128  

COMPARISON OF RIGHTS OF ENBRIDGE SHAREHOLDERS AND EEP UNITHOLDERS

     131  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS OF EEP

     156  

Owners of More than Five Percent of the Outstanding Units of EEP

     156  

Security Ownership of the Management and Directors of EEP

     157  

 

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QUESTIONS AND ANSWERS

The following section provides brief answers to certain questions that you may have regarding the Merger Agreement and the proposed Merger. Please note that this section does not address all issues that may be important to you as a holder of EEP units. Accordingly, you should carefully read this entire proxy statement/prospectus, including each of the annexes, and the documents that have been incorporated by reference into this proxy statement/prospectus. Please read the section titled “Where You Can Find More Information” beginning on page 166.

 

Q:

Why am I receiving these materials?

 

A:

This proxy statement/prospectus is being provided by the GP Board to holders of EEP units in connection with the proposed Merger and the issuance of Enbridge common shares to holders of Class A common units in connection with the proposed Merger.

 

Q:

What is the proposed transaction?

 

A:

Enbridge and EEP have agreed that Enbridge will acquire EEP by merging Merger Sub, a wholly owned subsidiary of Enbridge, with and into EEP, with EEP surviving the Merger as an indirect wholly owned subsidiary of Enbridge, under the terms of the Merger Agreement described in this proxy statement/prospectus and attached as Annex A to this proxy statement/prospectus. As a result of the Merger, each issued and outstanding Class A common unit, other than the Excluded Units, will be converted into the right to receive 0.335 of an Enbridge common share. The Excluded Units will remain outstanding and will not be affected by the Merger and no consideration will be delivered in respect thereof.

The Merger will become effective at the Effective Time.

 

Q:

Who is soliciting my proxy?

 

A:

Your proxy is being solicited by the GP Board.

 

Q:

When and where is the special meeting?

 

A:

The special meeting will be held on December 17, 2018 at 10:00 a.m., local time, at the Hilton Houston Post Oak by the Galleria, 2001 Post Oak Boulevard, Houston, Texas 77056.

 

Q:

What matters will be voted on at the special meeting?

 

A:

You will be asked to consider and vote on the following proposals:

 

   

Merger Agreement : To approve the Merger Agreement; and

 

   

Adjournment : To approve any motion to adjourn the special meeting from time to time to a later date to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal on the Merger Agreement.

 

Q:

How do the Special Committee, the GP Delegate Board and the GP Board recommend that I vote on the proposals?

 

A:

The Special Committee recommends that you vote:

 

   

FOR ” the proposal to approve the Merger Agreement.

 

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The GP Delegate Board and the GP Board each recommend that you vote:

 

   

FOR ” the proposal to approve the Merger Agreement; and

 

   

FOR ” any adjournment proposal.

For a discussion of each proposal, see the sections titled “ The Merger—Recommendation of the Special Committee ” beginning on page 72, “ The Merger—Recommendation of the GP Delegate Board ” beginning on page 72, “ The Merger—Recommendation of the GP Board ” beginning on page 72 and “ The Merger—Reasons for the Recommendation of the Special Committee ” beginning on page 72.

 

Q:

Who is entitled to vote at the special meeting?

 

A:

Only holders of Outstanding EEP units as of the close of business on November 5, 2018, will be entitled to notice of, and to vote at, the special meeting or any adjournment or postponement thereof. November 5, 2018 is referred to as the “Record Date” for the purposes of the special meeting.

 

Q:

What constitutes a quorum for the special meeting?

 

A:

A quorum is the number of units that must be present, in person or by proxy, in order for business to be transacted at a meeting of the EEP unitholders. A quorum of EEP unitholders is required to approve the Merger Agreement at the special meeting, but not to approve any adjournment of the meeting. The presence, in person or by proxy, of EEP unitholders representing 66 2 3 % of the Outstanding EEP units on the Record Date will constitute a quorum for the special meeting.

 

Q:

What vote is required to approve the proposals?

 

A:

The approval of the Merger Agreement and the Merger by EEP requires the affirmative vote by (1) the holders of at least 66 2 3 % of the Outstanding EEP units, and (2) the holders of a majority of the outstanding Class A common units (other than any Class A common units held by Enbridge and its affiliates) and the outstanding i-units (other than i-units voted at the direction of Enbridge and its affiliates), voting together as a single class, in each case entitled to vote on such matter at the special meeting or any adjournment or postponement thereof. Pursuant to the terms of the EEP Partnership Agreement, the General Partner may adjourn the special meeting from time to time without limited partner action as described under “The Special Meeting—Adjournments”. Adjournment of the special meeting by EEP limited partner action requires (1) if a quorum does not exist, the affirmative vote of the holders of a majority of the outstanding EEP units represented either in person or by proxy at the special meeting or (2) if a quorum does exist, the affirmative vote of 66 2 3 % of the outstanding EEP units represented either in person or by proxy at the special meeting.

Pursuant to the terms of the Merger Agreement, Enbridge and certain of its subsidiaries, which as of November 5, 2018 beneficially owned approximately 148.3 million Outstanding EEP units (inclusive of the approximately 11.5 million i-units corresponding to the number of shares of the GP Delegate indirectly owned by Enbridge) representing approximately 32.9% of the Outstanding EEP units, have agreed that, at the special meeting and at any meeting of holders of listed shares of EEQ held for the purpose of determining how the i-units shall be voted, it will vote, or cause to be voted, to the extent permitted under the organizational documents of EEQ, any EEP units or listed shares of EEQ then owned beneficially or of record by it or any of its subsidiaries, in favor of the approval of the Merger Agreement.

ENBRIDGE SHAREHOLDERS ARE NOT BEING ASKED FOR A CONSENT OR PROXY AND ENBRIDGE SHAREHOLDERS ARE REQUESTED NOT TO SEND ENBRIDGE A CONSENT OR PROXY.

 

Q:

How are votes counted?

 

A:

For the proposal to approve the Merger Agreement, you may vote FOR, AGAINST or ABSTAIN. Abstentions will not be counted as votes cast or EEP units voting on the proposal to approve the Merger

 

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  Agreement, but will count for the purpose of determining whether a quorum is present. If you abstain, it will have the same effect as if you voted against the proposal to approve the Merger Agreement. Failure to submit your proxy or to attend the meeting will also have the same effect as a vote against the proposal to approve the Merger Agreement. In addition, if your EEP units are held in the name of a bank, broker, nominee, trust company or other fiduciary, your bank, broker, nominee, trust company or other fiduciary will not be entitled to vote your EEP units on the proposal to approve the Merger Agreement in the absence of specific instructions from you. These non-voted EEP units will not be counted as present for purposes of determining a quorum and will have the effect of a vote against the approval of the Merger Agreement.

For any adjournment proposal, you may vote FOR, AGAINST or ABSTAIN. If you abstain, it will have the same effect as a vote against this proposal. Failure to submit your proxy and to attend the meeting will have no effect on the outcome of any vote to adjourn the special meeting if a quorum is not present. If a quorum is present, it will have the same effect as a vote against any adjournment proposal. In addition, if your EEP units are held in the name of a bank, broker, nominee, trust company or other fiduciary, your bank, broker, nominee, trust company or other fiduciary will not be entitled to vote your EEP units on this proposal in the absence of specific instructions from you. These non-voted EEP units will not be counted as present for purposes of determining a quorum and will have no effect on the outcome of any vote of the EEP limited partners to adjourn the special meeting unless a quorum is present.

If you sign your proxy card without indicating how you wish to vote, your shares will be voted FOR the approval of the Merger Agreement and FOR any adjournment proposal, and in accordance with the recommendations of the GP Delegate Board and the GP Board on any other matters properly brought before the meeting for a vote.

 

Q:

How do Enbridge and the General Partner’s and the GP Delegate’s directors and executive officers intend to vote?

 

A:

As of November 5, 2018, Enbridge and its subsidiaries (other than the GP Delegate) held and were entitled to vote, in the aggregate, Class A common units, Class B common units and Class E units of EEP, and the GP Delegate’s shares corresponding to i-units of EEP, representing approximately 32.9% of the Outstanding EEP units, and the directors and executive officers of the General Partner and the GP Delegate held and were entitled to vote, in the aggregate, Class A common units and the GP Delegate’s shares corresponding to EEP i-units representing in the aggregate less than 1.0% of the Outstanding EEP units. Enbridge has agreed in the Merger Agreement that, subject to limited exceptions, it and its subsidiaries would vote their EEP units and the listed and voting shares of the GP Delegate (which are referred to as the “EEQ shares”) FOR the Merger Agreement proposal, and Enbridge believes that Enbridge and its subsidiaries intend to vote their EEP units and EEQ shares FOR any adjournment proposal. Enbridge believes the General Partner’s and the GP Delegate’s directors and executive officers intend to vote all of their EEP units and EEQ shares FOR the Merger Agreement proposal and FOR any adjournment proposal. The GP Delegate will submit the Merger Agreement proposal and any adjournment proposal to a vote of the GP Delegate shareholders to determine how the GP Delegate will vote the i-units of EEP at the special meeting.

 

Q:

How will the i-units be voted by the GP Delegate with respect to the Merger?

 

A:

In any matter submitted by EEP for a vote of the holders of the i-units of EEP, including the Merger, the i-units of EEP will be voted by the GP Delegate proportionately to the number of affirmative and negative votes cast by holders of the EEQ shares. The Merger will be submitted to a vote of the GP Delegate’s shareholders. Following the conclusion of such GP Delegate’s shareholder vote, the GP Delegate will vote the i-units of EEP held by it on the Merger in proportion to the number of affirmative and negative votes of the GP Delegate voted with respect to the Merger at the special meeting.

 

Q:

What will happen to EEP as a result of the Merger?

 

A:

If the Merger is successfully completed, Merger Sub will be merged with and into EEP, with EEP being the surviving entity, and EEP will become an indirect wholly owned subsidiary of Enbridge.

 

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Q:

What will holders of Class A common units be entitled to receive in the Merger?

 

A:

At the Effective Time of the Merger, each Class A common unit issued and outstanding (other than the Excluded Units) will be converted into the right to receive 0.335 of an Enbridge common share, which is referred to as the “Merger Consideration”.

If the Exchange Ratio would result in an Unaffiliated EEP Unitholder being entitled to receive, after aggregating all fractional units which such holder would otherwise be entitled to receive in connection with the Merger, a fraction of an Enbridge common share rounding to three decimal places, such holder will receive a cash payment (without interest, rounded down to the nearest cent) in lieu of such fractional Enbridge common share in an amount equal to the product obtained by multiplying (1) the amount of the fractional share interest in an Enbridge common share to which such holder would be entitled rounding to three decimal places and (2) an amount equal to the average of the volume-weighted average price per share of Enbridge common shares on the NYSE (as reported by Bloomberg L.P., or, if not reported therein, in another authoritative source mutually selected by Enbridge and EEP) on the trading day immediately prior to the Effective Time for ten trading days ending on the fifth full business day immediately prior to the Closing Date. For additional information regarding exchange procedures, please read “ The Merger Agreement—Exchange Procedures ” beginning on page 102.

 

Q:

What will happen to future distributions on my Class A common units?

 

A:

Once the Merger is completed, former EEP unitholders who surrender their Class A common units in accordance with the Merger Agreement will be eligible, in their capacity as Enbridge shareholders, to receive dividends declared by the board of directors of Enbridge (the “Enbridge Board”) on Enbridge common shares, if any, after the Effective Time of the Merger. Enbridge has a sustained track record of declaring dividends on Enbridge common shares continuing through recent periods and has forecasted that it will continue to do so; however, there is no guarantee that the Enbridge Board will, in the future, declare dividends on Enbridge common shares. See the sections titled “ Comparative Share and Unit Prices; Dividends and Distributions ” beginning on page 27 and “ Risk Factors—Risks Related to the Enbridge Common Shares—Enbridge may not pay any cash dividends to Enbridge shareholders, and Enbridge’s ability to declare and pay cash dividends to Enbridge shareholders, if any, in the future will depend on various factors, many of which are beyond Enbridge’s control ” beginning on page 38.

 

Q:

When do you expect the Merger to be completed?

 

A:

Enbridge and EEP are working to complete the Merger as soon as possible. A number of conditions must be satisfied before Enbridge and EEP can complete the Merger. For more information about these conditions, please read “ The Merger Agreement—Conditions to the Completion of the Merger ” beginning on page 118. Although Enbridge and EEP cannot be sure when all of the conditions to the Merger will be satisfied, Enbridge and EEP expect to complete the Merger as soon as practicable following the effectiveness of the registration statement of which this proxy statement/prospectus forms a part. Assuming timely satisfaction of the necessary closing conditions, Enbridge and EEP currently expect the Closing Date to occur in the fourth quarter of 2018.

 

Q:

Does the Special Committee, the GP Delegate Board and the GP Board recommend that Unaffiliated EEP Unitholders approve the Merger Agreement and the Merger?

 

A:

Yes. The Special Committee, the GP Delegate Board and the GP Board recommend that the Unaffiliated EEP Unitholders approve the Merger Agreement and the Merger.

The Special Committee, the GP Delegate Board and the GP Board considered the benefits of the Merger Agreement, the Merger and the related transactions as well as the associated risks and, acting in good faith, unanimously (1) determined that the Merger Agreement and the transactions contemplated thereby,

 

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including the Merger, are fair and reasonable to EEP, including the Unaffiliated EEP Unitholders, and (2) approved the Merger Agreement and the transactions contemplated thereby, including the Merger, on the terms and subject to the conditions set forth in the Merger Agreement. The Special Committee recommended that the GP Delegate Board approve the Merger Agreement and the transactions contemplated thereby, including the Merger. The GP Delegate Board recommended that the GP Board approve the Merger Agreement and the transactions contemplated thereby, including the Merger. The GP Board directed that the Merger Agreement be submitted to the limited partners of EEP for their approval. Each of the GP Delegate Board and the GP Board recommends that the limited partners of EEP approve the Merger Agreement and the Merger.

 

Q:

What happens if I transfer or sell my EEP units after the Record Date but before the special meeting or before completion of the Merger?

 

A:

The Record Date is earlier than the date of the special meeting and the date that the Merger is expected to be completed. If you transfer or sell your EEP units after the Record Date but before the date of the special meeting, you will retain your right to vote at the special meeting, but you will not have the right to receive the Merger Consideration in the Merger. In order to receive the Merger Consideration, you must hold your EEP units through the completion of the Merger.

 

Q:

What do I need to do now?

 

A:

Please vote as soon as possible. Enbridge and EEP urge you to read carefully this proxy statement/prospectus, including its annexes, and to consider how the Merger affects you as an EEP unitholder. You should also carefully read the documents referenced under “ Where You Can Find More Information ”.

 

Q:

How do I vote?

 

A:

You should simply indicate on your proxy card how you want to vote, and sign and mail your proxy card in the enclosed return envelope as soon as possible so that your EEP units will be represented at the special meeting. If you sign and send in your proxy card and do not indicate how you want to vote, your EEP units will be voted for approval of the Merger Agreement and for any adjournment proposal. If you fail to vote your EEP units, the effect will be a vote against approval of the Merger Agreement, but it will not affect the vote on any proposal to adjourn the special meeting unless a quorum is present.

If your EEP units are held by your bank, broker, nominee, trust company or other fiduciary, see below.

 

Q:

Can I vote by telephone or electronically?

 

A:

If you hold your EEP units as an EEP unitholder of record, you may vote by telephone or by the Internet by following the instructions set forth on the enclosed proxy card.

If your EEP units are held by your bank, broker, nominee, trust company or other fiduciary, often referred to as held in “street name”, please contact your bank, broker, nominee, trust company or other fiduciary to determine whether you will be able to vote by telephone or electronically.

 

Q:

If my EEP units are held in “street name” by my bank, in a brokerage firm or other nominee, will my bank, brokerage firm or other nominee automatically vote my EEP units for me?

 

A:

No, if you hold your EEP units in “street name” with a bank, brokerage firm or other nominee, you should follow the instructions provided by your bank, brokerage firm or other nominee.

 

Q:

What does it mean if I receive more than one set of voting materials?

 

A:

You may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus, the proxy card or the voting instruction form. This can occur if you hold your EEP units in more

 

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  than one brokerage account, if you hold EEP units directly as a holder of record and also in “street name”, or otherwise through another holder of record, and in certain other circumstances. If you receive more than one set of voting materials, please vote or return each set separately in order to ensure that all of your EEP units are voted.

 

Q:

May I change my vote?

 

A:

Yes. You may change your vote at any time before your proxy is voted at the special meeting, subject to the limitations described below. If you are an EEP unitholder of record and have properly completed and submitted your proxy card or proxy by telephone or the Internet, you may do this in a number of ways.

 

   

First , you may send EEP a written notice stating that you would like to revoke your proxy.

 

   

Second , you may complete and submit a new, later-dated proxy card.

If you choose either of these two methods, you must submit your notice of revocation or your new proxy card to the Corporate Secretary of the GP Delegate, at 5400 Westheimer Court, Houston, Texas 77056. You also may submit a later-dated proxy using the telephone or Internet voting procedures on the proxy card. If you choose to revoke your proxy by written notice or submit a later-dated proxy, you must do so by 11:59 p.m., Eastern Time, on the day before the special meeting.

Finally, you may attend the special meeting and vote in person. Simply attending the special meeting, without voting in person, will not revoke your proxy. If your EEP units are held in street name and you have instructed a bank, broker, nominee, trust company or other fiduciary to vote your EEP units, you must follow the directions received from your bank, broker, nominee, trust company or other fiduciary to change your vote or to vote at the special meeting.

 

Q:

Should holders of Class A common units tender their Class A common units now?

 

A:

No. After the Merger is completed, holders of Class A common units who hold their Class A common units in certificated or book-entry form will receive written instructions for exchanging their Class A common units. If you own Class A common units in “street name”, the Merger Consideration should be credited to your account in accordance with the policies and procedures of your broker or nominee within a few days following the closing date of the Merger. More information on the documentation you are required to deliver to the Exchange Agent can be found in the section titled “ The Merger Agreement—Exchange Procedures ” beginning on page 102.

Please do not send in your EEP unit certificates now.

 

Q:

Where will Class A common units and Enbridge common shares trade after the Merger?

 

A:

Class A common units will no longer be publicly traded following the Merger and will be delisted from the NYSE. Enbridge common shares will continue to trade on the NYSE and the TSX under the symbol “ENB” after the Merger.

 

Q:

What percentage of Enbridge common shares will current Unaffiliated EEP Unitholders own after the successful consummation of the proposed Merger?

 

A:

If the proposed Merger is successfully completed, Unaffiliated EEP Unitholders would collectively receive 72,256,181 Enbridge common shares, which represents approximately 4.0% of the outstanding Enbridge common shares based on the Exchange Ratio and the number of outstanding Enbridge common shares and Class A common units (other than the Excluded Units) as of November 5, 2018 (excluding any Enbridge common shares to be issued in connection with the Other Merger Transactions). If, in addition to the proposed Merger, each Other Merger Transaction is successfully completed, the Merger Consideration

 

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  would represent approximately 3.6% of the outstanding Enbridge common shares, based on the number of Enbridge common shares to be issued in the proposed Merger and the Other Merger Transactions pursuant to the respective merger agreements and arrangement agreement, and the number of outstanding Enbridge common shares and outstanding shares or units, as the case may be, of each of EEQ, SEP and ENF, as of November 5, 2018. The actual number of Enbridge common shares issued in the Merger will be determined by multiplying the Exchange Ratio by the number of issued and outstanding Class A common units held by Unaffiliated EEP Unitholders as of the closing date of the Merger. The actual number of Enbridge common shares issued in each of the Other Merger Transactions will be determined by multiplying the applicable exchange ratio by the number of publicly held shares or units of the acquired entity as of the closing date of each such transaction.

 

Q:

What are the expected U.S. federal income tax consequences to an EEP unitholder as a result of the Merger?

 

A:

The receipt of Enbridge common shares and cash in lieu of fractional shares, if any, in exchange for Class A common units pursuant to the Merger Agreement should be a taxable transaction to U.S. holders (as defined in the section titled “ Material U.S. Federal Income Tax Consequences of the Merger ” beginning on page 125) for U.S. federal income tax purposes. In such case, a U.S. holder will generally recognize gain or loss on the receipt of Enbridge common shares and/or any cash received in lieu of fractional shares in exchange for Class A common units, generally taxable as capital gain or loss. However, a portion of this gain or loss, which portion could be substantial, will be separately computed and taxed as ordinary income or loss to the extent attributable to assets giving rise to depreciation recapture or other “unrealized receivables” or to “inventory items” owned by EEP and its subsidiaries. Passive losses that were not deductible by a U.S. holder in prior taxable periods because they exceeded a U.S. holder’s share of EEP’s income may become available to offset a portion of the gain recognized by such U.S. holder. For more information, see the section titled “ Material U.S. Federal Income Tax Consequences of the Merger ” beginning on page 125 for a more complete discussion of the expected material U.S. federal income tax consequences of the Merger.

 

Q:

What are the expected U.S. federal income tax consequences for an EEP unitholder as a result of the ownership of Enbridge common shares after the Merger is completed?

 

A:

Enbridge is a corporation organized under the laws of Canada that is treated as a corporation for U.S. federal income tax purposes, and thus, Enbridge and its subsidiaries (and not the Enbridge shareholders) are subject to taxation on their taxable income. A distribution of cash by Enbridge to a shareholder who is a U.S. holder (as defined in the section titled “ Material U.S. Federal Income Tax Consequences of the Merger ” beginning on page 125) will generally be included in such U.S. holder’s income as ordinary dividend income to the extent of Enbridge’s current and accumulated “earnings and profits” as determined under U.S. federal income tax principles. Any portion of the cash distributed to Enbridge shareholders by Enbridge after the Merger that exceeds Enbridge’s current and accumulated earnings and profits will be treated as a non-taxable return of capital reducing a U.S. holder’s adjusted tax basis in such U.S. holder’s Enbridge common shares and, to the extent the distribution exceeds such shareholder’s adjusted tax basis, as capital gain from the sale or exchange of such Enbridge common shares. However, Enbridge does not expect to calculate earnings and profits in accordance with U.S. federal income tax principles. Accordingly, each Enbridge shareholder should expect to generally treat distributions made by Enbridge as dividends. See the section titled “ Material U.S. Federal Income Tax Consequences of the Merger ” beginning on page 125 for a more complete discussion of the expected U.S. federal income tax consequences of owning and disposing of Enbridge common shares received in the Merger.

 

Q:

What are the expected Canadian federal income tax consequences for an EEP unitholder as a result of the ownership of Enbridge common shares after the Merger is completed?

 

A:

Dividends paid or credited or deemed to be paid or credited on Enbridge common shares to a Non-Canadian Resident Holder (as defined in the section titled “ Material Canadian Federal Income Tax Consequences of

 

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  the Merger ” beginning on page 122) generally will be subject to Canadian withholding tax at a rate of 25% of the gross amount of the dividend, unless the rate is reduced under the provisions of an applicable income tax convention between Canada and the Non-Canadian Resident Holder’s jurisdiction of residence. For example, the rate of withholding tax under the Treaty applicable to a Non-Canadian Resident Holder who is a resident of the United States for purposes of the Treaty, is the beneficial owner of the dividend and is entitled to all of the benefits under the Treaty, generally will be 15%. Enbridge will be required to withhold the required amount of withholding tax from the dividend, and to remit the withheld tax to the CRA for the account of the Non-Canadian Resident Holder.

A Non-Canadian Resident Holder will not be subject to tax under the Canadian Tax Act on any capital gain realized on a disposition of Enbridge common shares, unless the shares are “taxable Canadian property” and the shares are not “treaty-protected property” (as those terms are defined in the Canadian Tax Act) of the Non-Canadian Resident Holder, at the time of the disposition. See the section titled “ Material Canadian Federal Income Tax Consequences of the Merger ” beginning on page 122 for a more complete discussion of the expected Canadian federal income tax consequences of owning and disposing of Enbridge common shares received in the Merger.

 

Q:

Are holders of Class A common units entitled to appraisal rights?

 

A:

No. Holders of Class A common units do not have appraisal rights under applicable law or contractual appraisal rights under the EEP Partnership Agreement or the Merger Agreement.

 

Q:

What happens if the Merger is not completed?

 

A:

If the Merger Agreement is not completed for any reason, you will not receive any form of consideration for your Class A common units in connection with the Merger. Instead, EEP will remain a public limited partnership and the Class A common units will continue to be listed and traded on the NYSE.

 

Q:

Enbridge has also entered into acquisition agreements in respect of the Other Merger Transactions. What impact will these transactions have on the Merger?

 

A:

Enbridge has also entered into acquisition agreements to acquire, in separate combination transactions, all of the outstanding equity securities that Enbridge does not already own of (1) EEQ, (2) SEP and (3) ENF. The completion of the Merger is not conditioned upon or subject to the completion of any of the Other Merger Transactions. In the event of the successful completion of any or all of the Other Merger Transactions, Enbridge expects to issue additional Enbridge common shares in exchange for the equity interests acquired in such transactions. See the section titled “ Risk Factors—Risks Related to the Enbridge Common Shares There may be future dilution of the Enbridge common shares, including as a result of any Enbridge common shares issued in connection with the Other Merger Transactions, which could adversely affect the market price of Enbridge common shares ” beginning on page 39.

 

Q:

Whom do I call if I have further questions about the Merger Agreement or the Merger?

 

A:

If you have any questions about the Merger or if you need additional copies of this proxy statement/prospectus or the enclosed proxy card, you should contact D.F. King & Co., Inc., which is acting as the proxy solicitation agent and information agent in connection with the Merger.

D.F. King & Co., Inc.

48 Wall Street, 22nd Floor

New York, NY 10005

Banks and Brokers call: (212) 269-5550

All others call toll-free: (800) 549-6746

Email: Enbridge@dfking.com

 

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SUMMARY

This summary highlights selected information included in this proxy statement/prospectus and does not contain all the information that may be important to you. To fully understand the Merger Agreement and the transactions contemplated thereby and for a more complete description of the terms of the Merger Agreement, you should read carefully this entire proxy statement/prospectus, including the annexes, as well as the documents incorporated by reference into this proxy statement/prospectus, and the other documents to which you are referred. In addition, Enbridge and EEP incorporate by reference important business and financial information about Enbridge and EEP into this document, as further described in the section titled “Where You Can Find More Information” beginning on page 166. You may obtain the information incorporated by reference into this document without charge by following the instructions in the section titled “Where You Can Find More Information” beginning on page 166. Each item in this summary includes a page reference directing you to a more complete description of that item.

Information about the Companies (page 43)

Enbridge Inc.

200, 425 - 1st Street S.W.

Calgary, Alberta T2P 3L8, Canada

Phone: 1-403-231-3900

Enbridge is a North American energy infrastructure company with strategic business platforms that include an extensive network of crude oil, liquids and natural gas pipelines, regulated natural gas distribution utilities and renewable power generation assets. Enbridge delivers an average of 2.9 million barrels of crude oil each day through its Mainline and Express Pipeline, and accounts for approximately 62% of United States-bound Canadian crude oil exports. Enbridge also moves approximately 22% of all natural gas consumed in the United States, serving key supply basins and demand markets. Its regulated utilities serve approximately 3.7 million retail customers in Ontario, Quebec and New Brunswick. Enbridge also has interests in more than 1,700 megawatts (MW) of net renewable power generation capacity in North America and Europe. Enbridge has ranked on the Global 100 Most Sustainable Corporations index for the past nine years. Enbridge was incorporated on April 13, 1970 under the Companies Ordinance of the Northwest Territories and was continued under the Canada Business Corporations Act (the “Canada Corporations Act”) on December 15, 1987. Enbridge indirectly holds all of the outstanding equity interests of Merger Sub, an indirect wholly owned subsidiary formed in Delaware for the sole purpose of completing the Merger.

Enbridge is a public company and the Enbridge common shares trade on both the TSX and the NYSE under the ticker symbol “ENB”. Enbridge’s principal executive offices are located at 200, 425 - 1st Street S.W., Calgary, Alberta T2P 3L8, Canada, and its telephone number is 1-403-231-3900.

Enbridge Energy Partners, L.P.

5400 Westheimer Court

Houston, Texas 77056

Phone: (713) 627-5400

EEP is a publicly-traded Delaware limited partnership that owns and operates crude oil and liquid petroleum transportation and storage assets and natural gas gathering, treating, processing, transportation and marketing assets in the United States. EEP was formed in 1991 by the General Partner to own and operate the Lakehead System, which is the U.S. portion of a crude oil and liquid petroleum pipeline system extending from western



 

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Canada through the upper and lower Great Lakes region of the United States to eastern Canada (Mainline System). A subsidiary of Enbridge owns the Canadian portion of the Mainline System. Enbridge is the ultimate parent of the General Partner.

The GP Delegate is a Delaware limited liability company that was formed in May 2002 to manage EEP’s business and affairs. Under a delegation of control agreement, the General Partner delegated substantially all of its power and authority to manage and control EEP’s business and affairs to the GP Delegate. The General Partner, through its direct ownership of the voting shares of the GP Delegate, elects all of the directors of the GP Delegate. The GP Delegate is the sole owner of all of EEP’s i-units.

EEP’s executive offices are located at 5400 Westheimer Court, Houston, Texas 77056, and its telephone number is (713) 627-5400.

Merger Sub

5400 Westheimer Court

Houston, Texas 77056

Phone: (713) 627-5400

Merger Sub, a Delaware limited liability company and an indirect wholly owned subsidiary of Enbridge, was formed solely for the purpose of facilitating the Merger. Merger Sub has not carried on any activities or operations to date, except for those activities incidental to its formation and undertaken in connection with the transactions contemplated by the Merger Agreement. By operation of the Merger, Merger Sub will be merged with and into EEP. As a result, EEP will survive the Merger as a wholly owned subsidiary of Enbridge. Upon completion of the Merger, Merger Sub will cease to exist as a separate entity.

Merger Sub’s principal executive offices are located at 5400 Westheimer Court, Houston, Texas 77056, and its telephone number is (713) 627-5400.

The Merger and the Merger Agreement (pages 52 and 100)

The terms and conditions of the Merger are contained in the Merger Agreement, which is attached to this document as Annex  A and is incorporated by reference herein in its entirety. You are encouraged to read the Merger Agreement carefully, as it is the legal document that governs the Merger.

The Special Committee, the GP Delegate Board and the GP Board have unanimously approved the Merger Agreement. The Merger Agreement provides for the acquisition by Enbridge of the outstanding Class A common units not already owned by Enbridge and its subsidiaries through the merger of Merger Sub, a wholly owned subsidiary of Enbridge, with and into EEP with EEP continuing as the surviving company. Each Unaffiliated EEP Unitholder will be entitled to receive 0.335 of an Enbridge common share in exchange for each Class A common unit that such holder owns immediately prior to the Effective Time of the Merger.

Relationship of the Parties to the Merger Agreement (page 96)

Enbridge indirectly owns all of the common stock of the General Partner, the general partner of EEP, which owns approximately 148.3 million units of EEP (inclusive of the approximately 11.5 million i-units corresponding to the number of shares of the GP Delegate indirectly owned by Enbridge). These units, which, as of November 5, 2018, consist of approximately 110.8 million Class A common units, 7.8 million Class B common units, 18.1 million Class E units, 1,000 Class F units and approximately 11.5 million i-units (corresponding to the number of shares of the GP Delegate indirectly owned by Enbridge), represent



 

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approximately 32.9% of the total outstanding limited partner interests of EEP. In addition, the General Partner owns an effective 2% interest in EEP and its operating partnerships resulting from its general partnership interest in EEP. Together, these limited partner and general partner interests represent approximately 34.2% of EEP’s total effective ownership and economic interest.

The General Partner has delegated to the GP Delegate, subject to limited exceptions, all of its rights and powers to manage and control the business and affairs of EEP and its operating limited partnerships. The General Partner also owns all of the voting shares of the GP Delegate, which are the only shares entitled to vote in the election of the GP Delegate’s directors. The GP Delegate owns all of the outstanding i-units of EEP. Enbridge indirectly owns approximately 11.5 million listed shares of the GP Delegate, representing in the aggregate approximately 11.7% of the GP Delegate’s total outstanding limited liability company interests.

Certain executive officers and directors of Enbridge are also executive officers and directors of the General Partner and the GP Delegate. J. Herbert England serves as a member of the boards of directors of all three companies.

See the section titled “ The Merger Relationship of the Parties to the Merger Agreement ” beginning on page 96.

Merger Consideration (page 52)

At the Effective Time, by virtue of the Merger and without any action on the part of the parties or any holder of EEP partnership interests, each Class A common unit issued and outstanding immediately prior to the Effective Time (other than the Excluded Units) will be converted into the right to receive Enbridge common shares in exchange for such holder’s Class A common units at the Exchange Ratio. Enbridge will not issue any fractional Enbridge common shares in the Merger. For additional information regarding exchange procedures, please read “ The Merger Merger Consideration ” beginning on page 52.

Required Approval by the EEP Unitholders (page 99)

The approval of the Merger Agreement and the Merger by EEP requires the affirmative vote by (1) the holders of at least 66 2 3 % of the Outstanding EEP units, and (2) the holders of a majority of the outstanding Class A common units (other than any Class A common units held by Enbridge and its affiliates) and the outstanding i-units (other than i-units voted at the direction of Enbridge and its affiliates), voting together as a single class, in each case entitled to vote on such matter at the special meeting or any adjournment or postponement thereof. Pursuant to the terms of the Merger Agreement, Enbridge and certain of its subsidiaries, which as of November 5, 2018 beneficially owned approximately 148.3 million Outstanding EEP units (inclusive of the approximately 11.5 million i-units corresponding to the number of shares of the GP Delegate indirectly owned by Enbridge) representing approximately 32.9% of the Outstanding EEP units, have agreed that, at the special meeting and at any meeting of holders of listed shares of EEQ held for the purpose of determining how the i-units shall be voted, it will vote, or cause to be voted, to the extent permitted under the organizational documents of EEQ, any EEP units or listed shares of EEQ then owned beneficially or of record by it or any of its subsidiaries, in favor of the approval of the Merger Agreement.

Recommendation of the Special Committee, GP Delegate Board and the GP Board (page 72)

The Special Committee, the GP Delegate Board and the GP Board considered the benefits of the Merger Agreement, the Merger and the related transactions as well as the associated risks and, acting in good faith, unanimously (1) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are fair and reasonable to EEP, including the Unaffiliated EEP Unitholders, and (2) approved the Merger



 

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Agreement and the transactions contemplated thereby, including the Merger, on the terms and subject to the conditions set forth in the Merger Agreement. The Special Committee recommended that the GP Delegate Board approve the Merger Agreement and the transactions contemplated thereby, including the Merger. The GP Delegate Board recommended that the GP Board approve the Merger Agreement and the transactions contemplated thereby, including the Merger. The GP Board directed that the Merger Agreement be submitted to the limited partners of EEP for their approval. Each of the GP Delegate Board and the GP Board recommends that the limited partners of EEP approve the Merger Agreement and the Merger. For a discussion of the many factors considered by the Special Committee, the GP Delegate Board and the GP Board in making their determination and approval, please read “ The Merger—Recommendation of the Special Committee ” beginning on page 72, “ —Recommendation of the GP Delegate Board ” beginning on page 72 and —Recommendation of the GP Board ” beginning on page 72.

The Special Committee, the GP Delegate Board and the GP Board each recommend that EEP unitholders vote FOR the approval of the Merger Agreement and FOR the adjournment of the special meeting from time to time if necessary to solicit additional proxies if there are not sufficient votes to approve the Merger Agreement at the time of the special meeting.

Reasons for the Recommendation of the Special Committee (page 72)

The Special Committee consists of three independent directors: Jeffrey A. Connelly, William S. Waldheim and Dan S. Westbrook. The Special Committee retained Bracewell LLP (“Bracewell”) and Morris, Nichols, Arsht & Tunnell LLP (“MNAT”) as its independent legal advisors. The Special Committee also retained Morris James LLP (“Morris James”) as its independent legal advisor with respect to considering the Derivative Action (as defined below). In addition, the Special Committee retained Evercore Group L.L.C. (“Evercore”) as its independent financial advisor. The Special Committee oversaw the performance of the legal and financial due diligence by its advisors, conducted an extensive review and evaluation of the Merger and conducted negotiations with Enbridge and its representatives with respect to the Exchange Ratio and the Merger Agreement.

The Special Committee considered the benefits of the Merger Agreement and the Merger, as well as the associated risks, and on September 17, 2018, unanimously (1) determined that the Merger Agreement and the transactions contemplated thereby are fair and reasonable to EEP, including the Unaffiliated EEP Unitholders, (2) approved the Merger Agreement and the transactions contemplated thereby, (3) approved the execution, delivery and performance of the Merger Agreement by EEP, (4) recommended that the GP Delegate Board approve the Merger Agreement, the execution, delivery and performance of the Merger Agreement by EEP and the consummation of the transactions contemplated thereby and (5) recommended that the GP Delegate Board submit the Merger Agreement to a vote of the limited partners of EEP and recommend the approval of the Merger Agreement and the transactions contemplated thereby by the limited partners of EEP.

The GP Delegate Board directed that the Merger Agreement be submitted to the limited partners of EEP for their approval. The GP Delegate Board recommends that the limited partners of EEP approve the Merger Agreement and the transactions contemplated thereby, including the Merger.

Opinion of Evercore—Financial Advisor to the Special Committee (page 78)

The Special Committee retained Evercore to act as its financial advisor in connection with evaluating the proposed Merger. At the request of the Special Committee, at a meeting of the Special Committee held on September 17, 2018, Evercore rendered its oral opinion to the Special Committee (subsequently confirmed in writing) that, as of September 17, 2018, based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations of the review undertaken by Evercore in rendering its opinion as set forth therein, the Exchange Ratio was fair, from a financial point of view, to EEP and the holders



 

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of Class A common units other than Enbridge and its affiliates. The full text of Evercore’s written opinion, dated as of September 17, 2018, to the Special Committee, is attached as Annex  B to this proxy statement/prospectus and is incorporated herein by reference. The description of Evercore’s opinion set forth in this proxy statement/prospectus is qualified in its entirety by reference to the full text of Evercore’s written opinion.

Evercore’s opinion was prepared for the information and benefit of the Special Committee and for the purpose of providing an opinion to the Special Committee as to the fairness of the Exchange Ratio, from a financial point of view, to EEP and the holders of the Class A common units other than Enbridge and its affiliates. Evercore did not express any opinion on any other term, aspect or implication of the Merger. Evercore expressed no opinion as to the relative merits of the Merger as compared to other transactions or business or financial strategies that might be available to EEP, at the date of the opinion or in the future, including any potential transaction or strategy reviewed by Evercore, nor did it address the underlying business decision of Enbridge or EEP to engage in the Merger or use the Exchange Ratio. Neither Evercore’s opinion, the summary of such opinion nor the related analyses set forth in this proxy statement/prospectus are intended to be, and they do not constitute, a recommendation to the Special Committee, the GP Delegate Board, the holders of the Class A common units or any other persons in respect of the Merger, including as to how any holder of Class A common units or i-units of EEP or any holder of listed shares of EEQ should vote or act in respect of the Merger or any other transaction.

The Special Meeting (page 45)

Date, Time and Place of the Special Meeting (page 45)

The special meeting will be held on December 17, 2018 at 10:00 a.m., local time, at the Hilton Houston Post Oak by the Galleria, 2001 Post Oak Boulevard, Houston, Texas 77056.

Record Date; Outstanding EEP Units; Units Entitled to Vote (page 46)

The Record Date for the special meeting is November 5, 2018. Only holders of Outstanding EEP units as of the close of business on the Record Date will be entitled to receive notice of, and to vote at, the special meeting or any adjournment or postponement thereof.

A complete list of EEP unitholders entitled to vote at the special meeting will be available for inspection at EEP’s principal place of business during regular business hours for a period of no less than ten days before the special meeting and at the place of the special meeting during the meeting. See the section titled “ The Special Meeting—Record Date; Outstanding EEP Units; Units Entitled to Vote ” beginning on page 46.

Required Vote (page 46)

The approval of the Merger Agreement and the Merger by EEP requires the affirmative vote or consent of (1) the holders of at least 66 2 3 % of the Outstanding EEP units, and (2) the holders of a majority of the outstanding Class A common units (other than Class A common units held by Enbridge and its affiliates) and the outstanding i-units (other than i-units voted at the direction of Enbridge and its affiliates), voting together as a single class, in each case entitled to vote on such matter at the special meeting or any adjournment or postponement thereof (clauses (1) and (2) together, the “Unitholder Approval”). Accordingly, an EEP unitholder’s failure to submit a proxy or to vote in person at the special meeting or to abstain from voting, or the failure of an EEP unitholder who holds his or her EEP units in “street name” through a bank, broker, nominee, trust company or other fiduciary to give voting instructions to such bank, broker, nominee, trust company or other fiduciary, will have the same effect as a vote against approval of the Merger Agreement.

Adjournment of the special meeting from time to time by limited partner action, if necessary to solicit additional proxies, if there are not sufficient votes to approve the Merger Agreement at the time of the special meeting, requires (1) if a quorum does not exist, the affirmative vote of the holders of a majority of the



 

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Outstanding EEP units represented either in person or by proxy at the special meeting or (2) if a quorum does exist, the affirmative vote of 66 2 3 % of the Outstanding EEP units represented either in person or by proxy at the special meeting. Abstentions will have the same effect as a vote against the proposal to adjourn the special meeting. EEP units not in attendance at the special meeting and for which no proxy has been submitted will have no effect on the outcome of any vote to adjourn the special meeting if a quorum is not present. If a quorum is present, they would have the same effect as a vote against any adjournment proposal.

No Enbridge Shareholder Approval Required (page 99)

The approval of the Merger Agreement and the Merger by Enbridge does not require the affirmative vote or consent of the Enbridge shareholders.

Conditions to the Completion of the Merger (page 118)

The completion of the Merger is subject to certain customary closing conditions, including (1) the receipt of the Unitholder Approval, (2) the Enbridge common shares issuable in connection with the Merger having been approved for listing on the NYSE and the TSX, subject to official notice of issuance, (3) the expiration or termination of any waiting period (and any extension thereof) applicable to the Merger under the Hart-Scott Rodino Antitrust Improvements Act of 1976 (the “HSR Act”), (4) the absence of any governmental order prohibiting the consummation of the Merger or the other transactions contemplated by the Merger Agreement and (5) the registration statement having become effective under the Securities Act. The obligations of Enbridge, Enbridge (U.S.) Inc. and Merger Sub to consummate the Merger are also conditioned upon the accuracy of the representations and warranties of EEP, the General Partner and the GP Delegate as of the date of the Merger Agreement and as of the closing (subject to customary materiality qualifiers), the performance in all material respects by EEP of all obligations required to be performed by EEP under the Merger Agreement at or prior to closing and receipt of an officer’s certificate evidencing the satisfaction of the foregoing. The obligations of EEP, the General Partner and the GP Delegate to consummate the Merger are conditioned upon the accuracy of the representations and warranties of Enbridge, Enbridge (U.S.) Inc. and Merger Sub as of the date of the Merger Agreement and as of closing (subject to customary materiality qualifiers), the performance in all material respects by Enbridge, Enbridge (U.S.) Inc. and Merger Sub of all obligations required to be performed by them under the Merger Agreement at or prior to closing and receipt of an officer’s certificate evidencing the satisfaction of the foregoing.

Termination (page 120)

Enbridge and EEP may terminate the Merger Agreement and abandon the Merger at any time prior to the Effective Time of the Merger by mutual written consent of Enbridge and EEP, by action of the Enbridge Board and the GP Delegate Board with the approval of the Special Committee.

The Merger Agreement may also be terminated and the Merger abandoned by either the Enbridge Board or the GP Delegate Board, with the approval of the Special Committee, if:

 

   

the Merger has not been consummated by March 18, 2019 (the “Outside Date”);

 

   

Unitholder Approval is not obtained at the special meeting or at any adjournment or postponement thereof taken in accordance with the Merger Agreement; or

 

   

any applicable law or governmental order permanently restraining, enjoining or otherwise prohibiting consummation of the Merger has become final and nonappealable.

The Merger Agreement may be terminated and the Merger abandoned by Enbridge prior to the Effective Time if (1) the Special Committee changes its recommendation with respect to approval of the Merger



 

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Agreement prior to receipt of the Unitholder Approval or (2) there has been a breach by EEP of any representation, warranty, covenant or agreement set forth in the Merger Agreement, or if any such representation or warranty has become untrue after the date of the Merger Agreement, such that certain conditions to the obligations of Enbridge, Enbridge (U.S.) Inc. and Merger Sub to close would not be satisfied and such breach or failure to be true and correct is not curable prior to the Outside Date or, if curable prior to the Outside Date, is not cured within the earlier of 60 days after notice thereof is given by Enbridge to EEP or the Outside Date. The Merger Agreement may be terminated and the Merger abandoned by EEP (by action of the GP Delegate Board with Special Committee approval) prior to the Effective Time if there has been a breach by Enbridge, Enbridge (U.S.) Inc. or Merger Sub of any representation, warranty, covenant or agreement set forth in the Merger Agreement, or if any such representation or warranty has become untrue after the date of the Merger Agreement, such that certain conditions to the obligations of EEP, the GP Delegate and the General Partner to close would not be satisfied and such breach or failure to be true and correct is not curable prior to the Outside Date or, if curable prior to the Outside Date, is not cured within the earlier of 60 days after notice thereof is given by EEP to Enbridge or the Outside Date.

For further discussion, please read the section titled “ The Merger Agreement—Termination ” beginning on page 120.

No Dissenters’ or Appraisal Rights (page 99)

Holders of Class A common units do not have appraisal rights under applicable law or contractual appraisal rights under the EEP Partnership Agreement or the Merger Agreement.

Regulatory Approvals (page 94)

In connection with the Merger, Enbridge intends to make all required filings under the Securities Act and the Exchange Act, as well as any required filings or applications with the NYSE and the TSX.

In addition, to complete the Merger, EEP and Enbridge must make certain filings, submissions and notices to obtain required authorizations, approvals, consents or expiration or termination of waiting periods from U.S. and Canadian governmental and regulatory bodies, including antitrust and other regulatory authorities. EEP and Enbridge are not currently aware of any material governmental filings, authorizations, approvals or consents that are required prior to the parties’ completion of the Merger other than those described in the section titled “ The Merger—Regulatory Approvals ” beginning on page 94.

Completion of the Merger is subject to antitrust review in the United States. Under the HSR Act and the rules promulgated thereunder, the Merger cannot be completed until the parties to the Merger Agreement have given notification and furnished information to the Federal Trade Commission, which is referred to as the “FTC”, and the Antitrust Division of the U.S. Department of Justice, which is referred to as the “DOJ”, and until the applicable waiting period (or any extension of the waiting period) has expired or has been terminated.

Litigation and Regulatory Reviews/Investigations Related to the Merger (page 95)

Judy Mesirov v. Enbridge Energy Co., Inc. et al.

On July 20, 2015, plaintiff Peter Brinckerhoff, individually and as trustee of the Peter R. Brinckerhoff Trust, filed a Verified Class Action and Derivative Complaint in the Court of Chancery of the State of Delaware (the “Complaint”) against the General Partner, Enbridge, EEQ, Enbridge Pipelines (Alberta Clipper) L.L.C., Enbridge Energy, Limited Partnership, EEP, and the following individuals: Jeffrey A. Connelly, Rebecca B. Roberts, Dan A. Westbrook, J. Richard Bird, J. Herbert England, C. Gregory Harper, D. Guy Jarvis, Mark A. Maki, and John K. Whelen (collectively, the “Director Defendants”) (the “Derivative Action”).



 

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On February 28, 2018, plaintiff Peter Brinckerhoff filed a Motion for Leave to File a Verified Third Amended Complaint and a Motion to Intervene on behalf of a proposed new plaintiff, Judy Mesirov (either plaintiff Peter Brinckerhoff or plaintiff July Mesirov, as applicable, the “Derivative Action Plaintiff”) (subsequently amended). On April 3, 2018, all defendants filed their briefs in support of their motions to dismiss the Third Amended Complaint. Plaintiff Peter Brinckerhoff has now been dismissed as a named plaintiff. All direct claims have now been dismissed. Currently, the claims remaining in the case are now the Derivative Claims for (i) breach of contract (including equitable remedies of rescission or reformation) against the General Partner, EEQ, Enbridge Energy Management, L.L.C., Enbridge, the Director Defendants, and Enbridge Pipelines (Alberta Clipper) L.L.C and Enbridge Energy, Limited Partnership and (ii) aiding and abetting a breach of contract against Simmons. On September 28, 2018, the Derivative Action Plaintiff filed a Fifth Amended Complaint, adding Enbridge and the Director Defendants as defendants to the Derivative Claims.

If the Merger closes and Enbridge acquires all of the outstanding Class A common units of EEP, the Derivative Action Plaintiff will lose standing to continue her Derivative Claims on behalf of EEP, and Enbridge will become the owner of such Derivative Claims, effectively extinguishing the Derivative Claims.  Trial in the Derivative Action is currently scheduled for the second quarter of 2019.

Security Ownership of Certain Beneficial Owners of EEP (page 156)

As of November 5, 2018, Enbridge and its subsidiaries (other than the GP Delegate) held and were entitled to vote, in the aggregate, Class A common units, Class B common units and Class E units of EEP, and the GP Delegate’s shares corresponding to i-units of EEP, representing in the aggregate approximately 32.9% of the Outstanding EEP units, and the directors and executive officers of the General Partner and the GP Delegate held and were entitled to vote, in the aggregate, Class A common units and the GP Delegate’s shares corresponding to i-units of EEP representing in the aggregate less than 1.0% of the Outstanding EEP units. Enbridge has agreed in the Merger Agreement that, subject to limited exceptions, it and its subsidiaries would vote their respective EEP units and EEQ shares FOR the Merger Agreement proposal, and we believe that Enbridge and its subsidiaries intend to vote their respective EEP units and EEQ shares FOR any adjournment proposal. Enbridge believes that the General Partner’s and the GP Delegate’s directors and executive officers intend to vote all of their EEP units and EEQ shares FOR the Merger Agreement proposal and FOR any adjournment proposal. The GP Delegate will submit the Merger Agreement proposal and any adjournment proposal to a vote of the GP Delegate shareholders to determine how the GP Delegate will vote the EEP i-units at the special meeting.

Interests of Directors and Executive Officers of the GP Delegate and General Partner in the Merger (page 96)

EEP does not have any employees and relies on the GP Delegate to manage the conduct of EEP’s business. None of the individuals who has served as a director or executive officer at the GP Delegate or Enbridge since the beginning of 2017 has any agreements or understandings with Enbridge, EEP, the GP Delegate or the General Partner or any other party with respect to any type of compensation (whether present, deferred or contingent) that is based on or otherwise relates to the Merger.

The General Partner’s and the GP Delegate’s directors and executive officers may have other interests in the Merger that may differ from, or are in addition to, the interests of EEP unitholders generally. These interests include the following:

 

   

six of the ten directors of the General Partner and GP Delegate hold positions at Enbridge or its subsidiaries (other than the General Partner and the GP Delegate);

 

   

seven directors, including three non-management directors of the General Partner and GP Delegate own Enbridge common shares. Those directors, individually and in the aggregate, own shares representing less than 1.0% of the Enbridge common shares outstanding as of November 5, 2018;



 

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all of the executive officers of the General Partner and the GP Delegate hold positions at Enbridge or its subsidiaries (other than the General Partner or the GP Delegate);

 

   

12 individuals who serve as executive officers of the General Partner, and 11 individuals who serve as executive officers of the GP Delegate, own Enbridge common shares, which, individually and in the aggregate, represent less than 1.0% of the Enbridge common shares outstanding as of November 5, 2018;

 

 

   

the three directors on the Special Committee also serve on the EEQ Special Committee;

 

   

seven of the ten directors of the General Partner and the GP Delegate, including two directors on the Special Committee, are defendants in the Derivative Action; and

 

   

all of the directors and executive officers of the General Partner and GP Delegate have the right to indemnification under the EEP Partnership Agreement and the Merger Agreement. In addition, all of the directors and officers of Enbridge have the right to indemnification under the organizational documents of Enbridge and indemnification agreements with Enbridge.

The members of the Special Committee, GP Delegate Board and GP Board were aware of and considered these interests, among other matters, when they approved the Merger Agreement and when they recommended that EEP unitholders approve the Merger. These interests are described in more detail in the section titled “ The Merger—Interests of Directors and Executive Officers of the GP Delegate and the General Partner in the Merger ” beginning on page 96.

Material U.S. Federal Income Tax Consequences of the Merger (page 125)

The receipt of Enbridge common shares and cash in lieu of fractional shares, if any, in exchange for the Class A common units pursuant to the Merger Agreement should be a taxable transaction for U.S. federal income tax purposes to U.S. holders (as defined in the section titled “ Material U.S. Federal Income Tax Consequences of the Merger ” beginning on page 125).

In such case, a U.S. holder who receives Enbridge common shares and cash in lieu of fractional shares, if any, in exchange for Class A common units pursuant to the Merger will recognize gain or loss in an amount equal to the difference between:

 

   

the sum of (1) the fair market value of Enbridge common shares received, (2) the amount of any cash received and (3) such U.S. holder’s share of EEP’s nonrecourse liabilities immediately prior to the Merger; and

 

   

such U.S. holder’s adjusted tax basis in the Class A common units exchanged therefor (which includes such U.S. holder’s share of EEP’s nonrecourse liabilities immediately prior to the Merger).

Gain or loss recognized by a U.S. holder will generally be taxable as capital gain or loss. However, a portion of this gain or loss, which portion could be substantial, will be separately computed and taxed as ordinary income or loss under Section 751 of the Internal Revenue Code of 1986, as amended (the “Code”), to the extent attributable to assets giving rise to depreciation recapture or other “unrealized receivables” or to “inventory items” owned by EEP and its subsidiaries. Passive losses that were not deductible by a U.S. holder in prior taxable periods because they exceeded a U.S. holder’s share of EEP’s income may become available to offset a portion of the gain recognized by such U.S. holder.

The U.S. federal income tax consequences of the Merger to an EEP unitholder will depend on such unitholder’s own personal tax situation. Accordingly, each EEP unitholder is strongly urged to consult its tax advisor for a full understanding of the particular tax consequences of the Merger to such unitholder.

For additional information, read the section titled “ Material U.S. Federal Income Tax Consequences of the Merger ” beginning on page 125.



 

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Material Canadian Federal Income Tax Consequences of the Merger (page 122)

A Non-Canadian Resident Holder will not be subject to tax under the Canadian Tax Act on any capital gain realized on a disposition of Class A common units pursuant to the Merger, unless the Class A common units are “taxable Canadian property”, and are not “treaty-protected property” (as those terms are defined in the Canadian Tax Act) of the Non-Canadian Resident Holder, at the time of the disposition. See the section titled “ Material Canadian Federal Income Tax Consequences of the Merger ” beginning on page 122.

Listing of Enbridge Common Shares (page 99)

The completion of the Merger is conditioned upon the approval for listing of Enbridge common shares issuable pursuant to the Merger Agreement on the TSX and the NYSE, subject to official notice of issuance.

Delisting and Deregistration of the Class A Common Units (page 99)

Enbridge expects that, as promptly as practicable after the Effective Time, the Class A common units currently listed on the NYSE will cease to be listed on the NYSE and will be deregistered under the Exchange Act.

Comparison of Rights of Enbridge Shareholders and EEP Unitholders (page 131)

The differences between the rights of Enbridge shareholders and EEP unitholders result from differences between the organizational documents, governing law and type of organizational structure of Enbridge and EEP. Enbridge is a Canadian corporation. As a result, EEP unitholders who receive Enbridge common shares in the Merger will be principally governed by the Canada Corporations Act. EEP is a Delaware limited partnership. Ownership interests in a Delaware limited partnership are fundamentally different from ownership interests in a Canadian corporation. The rights of Enbridge shareholders are governed by the Enbridge Articles of Continuance and Certificates and Articles of Amendment, which is referred to as “Enbridge’s articles”, Enbridge General By-Law No. 1, as amended, and Enbridge By-Law No. 2, which is referred to collectively as “Enbridge’s by-laws”, and the Canada Corporations Act. The rights of EEP unitholders are governed by the EEP Partnership Agreement and the Delaware Revised Uniform Limited Partnership Act (the “DRULPA”). The key differences are described in the section titled “ Comparison of Rights of Enbridge Shareholders and EEP Unitholders ” beginning on page 131.

The Other Merger Transactions (page 44)

On August 24, 2018, Enbridge and SEP announced that they entered into the SEP merger agreement on the same day under which Enbridge will acquire all of the outstanding public units of SEP, subject to the approval of the SEP unitholders. Under the terms of the SEP merger agreement, SEP public unitholders will receive 1.111 Enbridge common shares for each outstanding public unit of SEP.

On September 18, 2018, Enbridge and EEQ announced that they entered into the EEQ merger agreement on September 17, 2018 under which Enbridge will acquire all of the outstanding public listed shares of EEQ, subject to the approval of the EEQ shareholders. Under the terms of the EEQ merger agreement, EEQ public shareholders will receive 0.335 of an Enbridge common share for each listed share of EEQ, which is at parity with the exchange ratio in the Merger. The EEQ merger is conditioned upon the consummation of the Merger.

Also on September 18, 2018, Enbridge and ENF announced that they entered into the arrangement agreement on September 17, 2018 (as amended, the “arrangement agreement”). On November 8, 2018, Enbridge and ENF completed the previously announced ENF plan of arrangement pursuant to Section 193 of the Business Corporations Act (Alberta) under which Enbridge acquired all of the issued and outstanding public common



 

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shares of ENF. Pursuant to the ENF plan of arrangement, each ENF common share was exchanged for 0.7350 of an Enbridge common share and cash of C$0.45 per ENF common share.

Risk Factors (page 33)

The Merger and an investment in Enbridge common shares involve risks, some of which are related to the Merger. In considering the Merger, you should carefully consider the information about these risks set forth under the section titled “ Risk Factors ” beginning on page 33, together with the other information included in, or incorporated by reference into, this proxy statement/prospectus.



 

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF ENBRIDGE

The following table sets forth the selected historical consolidated financial data of Enbridge as of and for the periods indicated. The selected historical consolidated financial data as of and for the years ended December 31, 2017, 2016, 2015, 2014 and 2013 were derived from Enbridge’s audited consolidated financial statements included in its annual reports on Form 10-K. The selected historical consolidated financial data as of September 30, 2018 and 2017 and for the nine months ended September 30, 2018 and 2017 were derived from the unaudited consolidated interim financial statements of Enbridge included in its quarterly reports on Form 10-Q.

The information set forth below is not necessarily indicative of future results and should be read together with the other information contained in Enbridge’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and its Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, including the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes therein. See the section titled “ Where You Can Find More Information ” beginning on page 166.

 

    For the
nine months ended
September 30,
   

For the fiscal years ended December 31,
 
    2018 (1)     2017 (1)     2017 (1)     2016 (1)     2015 (1)     2014     2013  
(millions of Canadian dollars, except per share amounts)     (Unaudited)    

Consolidated Statements of Earnings:

             

Operating Revenues

  $ 34,816     $ 31,489     $ 44,378     $ 34,560     $ 33,794     $ 37,641     $ 32,918  

Operating Income

    3,303       4,532       1,571       2,581       1,862       3,200       1,365  

Earnings/(loss) from continuing operations

    2,050       3,201       3,266       2,309       (159     1,562       490  

(Earnings)/loss attributable to noncontrolling interests and redeemable noncontrolling interests

    (352     (633     (407     (240     410       (203     135  

Earnings attributable to controlling interests

    1,698       2,568       2,859       2,069       251       1,405       629  

Earnings/(loss) attributable to common shareholders

    1,426       2,322       2,529       1,776       (37     1,154       446  

Common Share Data:

             

Earnings/(loss) per common share

             

Basic

  $ 0.84     $ 1.57     $ 1.66     $ 1.95     $ (0.04   $ 1.39     $ 0.55  

Diluted

    0.84       1.56       1.65       1.93       (0.04     1.37       0.55  

Dividends paid per common share

    2.013       1.803       2.41       2.12       1.86       1.40       1.26  
             
    As at
September 30,
   

As at December 31,
 
    2018 (1)     2017 (1)     2017 (1)     2016 (1)     2015 (1)     2014     2013  
(millions of Canadian dollars)   (Unaudited)        

Consolidated Statements of Financial Position:

             

Total Assets (2)

  $ 163,223     $ 163,441     $ 162,093     $ 85,209     $ 84,154     $ 72,280     $ 57,196  

Long-term debt, less current portion

    58,707       61,434       60,865       36,494       39,391       33,423       22,357  

 

(1)

Enbridge’s Consolidated Statements of Earnings and Consolidated Statements of Financial Position data reflect the following acquisitions, dispositions and impairment.

 

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2018—Midcoast Operating, L.P. impairment, Canadian natural gas gathering and processing business goodwill impairment, Line 10 impairment and other impairment

 

   

2017—The combination of Enbridge and Spectra Energy Corp (“Spectra Energy”) through a stock-for-stock merger transaction that closed on February 27, 2017, acquisition of public interest in Midcoast Energy Partners, L.P., the income tax benefit due to the enactment of the Tax Cuts and Jobs Act by the United States in December 2017 and other impairment

 

   

2016—Sandpiper Project impairment, gain on disposition of South Prairie Region assets, Tupper Plants acquisition and other impairment

 

   

2015—Goodwill impairment

 

(2)

Enbridge combined cash and cash equivalents and other amounts previously presented as bank indebtedness where the corresponding bank accounts are subject to pooling arrangements.

 

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF EEP

The following table sets forth the selected historical consolidated financial data of EEP as of and for the periods indicated. The selected historical consolidated financial data as of and for the years ended December 31, 2017, 2016, 2015, 2014 and 2013 were derived from EEP’s audited consolidated financial statements included in its annual reports on Form 10-K. The selected historical consolidated financial data as of September 30, 2018 and 2017 and for the nine months ended September 30, 2018 and 2017 were derived from the unaudited consolidated interim financial statements of EEP included in its quarterly reports on Form 10-Q.

The information set forth below is not necessarily indicative of future results and should be read together with the other information contained in EEP’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and its Quarterly Report on Form 10-Q for the quarter ended September 30, 2018, including the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes therein. See the section titled “ Where You Can Find More Information ” beginning on page 166.

 

                                                                            
    For the
nine months ended
September 30,
   

For the fiscal years ended December 31,
 
    2018     2017 (1)     2017 (1)(2)     2016 (1)     2015 (1)     2014 (1)     2013 (1)  
(in millions of United States dollars, except per unit amounts)     (Unaudited)            

Statement of Income Data:

             

Operating Revenues (2)

  $ 1,689     $ 1,817     $ 2,428     $ 2,516     $ 2,303     $ 2,070     $ 1,524  

Operating Income (3)

    734       846       1,121       481       964       934       375  

Income from continuing operations (3)

    567       606       708       116       739       596       143  

Income (loss) from discontinued operations, net of tax

    —         (57     (57     (157     (285     144       17  

Net income (loss)

    566       607       651       (41     454       740       160  

Net income (loss)—controlling interests

    273       251       245       (162     132       372       5  

Net income (loss) from continuing operations

    237       254       237       (268     119       74       (123

Net income (loss) attributable to common units and i-units

    237       216       200       (377     (85     218       5  

Unit Data:

             

Net income (loss) per common unit and i-unit (basic and diluted) from continuing operations

    0.55       0.65       0.60       (0.77     0.35       0.23       (0.39

Net income (loss) per common unit and i-unit

    0.55       0.55       0.50       (1.08     (0.25     0.67       (0.33

Cash distributions paid per limited partner unit (4)

    1.050       1.283       1.633       2.332       2.306       2.197       2.174  

 

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    As at
September 30,
   
As at December 31,
 
    2018     2017 (1)     2017 (1)     2016 (1)     2015 (1)     2014 (1)     2013 (1)  
(in millions of United States dollars)   (Unaudited)                                

Statements of Financial Position Data:

             

Total Assets (5)

  $ 14,950     $ 14,738     $ 14,828     $ 18,110     $ 18,774     $ 17,727     $ 14,881  

Long-term debt, excluding current maturities

    6,126       6,291       6,366       7,066       6,838       5,895       4,421  

Loans from General Partner and affiliate

    750       544       610       750       —         —         306  

Due to General Partner and affiliates

    34       55       —         328       238       148       47  

Other long-term liabilities

    244       211       178       197       189       169       20  

 

(1)

On June 28, 2017, EEP completed the sale of all its interest in its Midcoast gas gathering and processing business to the General Partner. This sale represented a strategic shift in EEP’s business and as a result, the results of operations and financial position of EEP’s natural gas business from the periods presented are reflected as discontinued operations.

(2)

EEP’s statements of income and financial position reflect the following dispositions:

 

Date of Disposition

  

Description of Disposition

December 2017    The disposition of unnecessary pipe related to the Sandpiper Project
March 2017    The disposition of the Ozark Pipeline system

 

(3)

Operating income for the year ended December 31, 2016 was impacted by a US$757 million asset impairment charge in relation to the Sandpiper project. For more information, see EEP’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, incorporated by reference herein.

(4)

On April 28, 2017, EEP announced the conclusion of its strategic review. As a result, of the strategic review, EEP reduced its quarterly distributions from US$0.583 per unit to US$0.35 per unit. For more information, see EEP’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, incorporated by reference herein.

(5)

Total assets for the years ended December 31, 2016, 2015, 2014, and 2013 are inclusive of amounts attributable to the interest in EEP’s Midcoast gas gathering and processing business which was sold to the General Partner on June 28, 2017.

 

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SELECTED UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

The following selected unaudited pro forma consolidated financial information is derived from the unaudited pro forma consolidated statements of Enbridge. The pro forma adjustments have been prepared as if the Merger and the Other Merger Transactions occurred on September 30, 2018, in the case of the unaudited pro forma condensed consolidated statements of financial position, and on January 1, 2017, in the case of the unaudited pro forma condensed consolidated statements of earnings for the nine months ended September 30, 2018 and the year ended December 31, 2017. In addition, the pro forma adjustments have been prepared as if the Midcoast Transactions occurred on January 1, 2017, in the case of the unaudited pro forma condensed consolidated statements of earnings for the nine months ended September 30, 2018 and the year ended December 31, 2017. The following selected unaudited pro forma consolidated financial information is for illustrative and informational purposes only and is not necessarily indicative of the results that might have occurred had such transactions taken place on January 1, 2017, for consolidated statements of earnings purposes, and September 30, 2018, for consolidated statements of financial position purposes, and is not intended to be a projection of future results. Future results may vary significantly from the results reflected because of various factors, including those discussed in the section titled “ Risk Factors ” beginning on page 33 of this proxy statement/prospectus. The following selected unaudited pro forma consolidated financial information should be read in conjunction with the Unaudited Pro Forma Condensed Consolidated Financial Statements section and related notes beginning on page F-1 of this proxy statement/prospectus.

 

     For the
nine months ended
September 30,

2018
     For the
year ended
December 31,
2017
 
(millions of Canadian dollars, except per share amounts)    (Unaudited)  

Consolidated Statements of Earnings:

  

Operating Revenues

   $ 33,120      $ 41,209  

Operating Income

     4,199        6,285  

Earnings/(loss) from continuing operations

     2,638        6,808  

(Earnings)/loss attributable to noncontrolling interests and redeemable noncontrolling interests

     21        (39

Earnings attributable to controlling interests

     2,659        6,769  

Earnings/(loss) attributable to common shareholders

     2,387        6,439  

Common Share Data:

     

Earnings / (loss) per common share

     

Basic

   $ 1.20      $ 3.54  

Diluted

     1.20        3.52  

 

     As at September 30, 2018  
(millions of Canadian dollars)    (Unaudited)  

Pro Forma Condensed Consolidated Statements of Financial Position:

  

Total Assets

   $ 163,123  

Long-term debt, less current portion

     58,707  

 

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COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE AND PER UNIT FINANCIAL INFORMATION

Presented below are Enbridge’s and EEP’s historical and pro forma per share/unit data for the year ended December 31, 2017 and nine months ended September 30, 2018. Except for the historical information for the year ended December 31, 2017, the information provided in the table below is unaudited. This information should be read together with the historical consolidated financial statements and related notes of Enbridge and EEP filed by each with the SEC, and incorporated by reference in this proxy statement/prospectus, and with the unaudited pro forma condensed consolidated financial statements included in the Unaudited Pro Forma Condensed Consolidated Financial Statements section beginning on page F-1.

The pro forma consolidated and pro forma consolidated equivalent per share information gives effect to the Merger, the Midcoast Transaction (except in the case of the book value per share/unit information, which does not reflect any adjustments for the Midcoast Transaction, as it was completed on August 1, 2018) and the Other Merger Transactions as if such transactions had been completed as of the applicable date. Such pro forma information is presented for illustrative purposes only and is not necessarily indicative of the operating results that would have occurred if the Merger, the Midcoast Transaction or Other Merger Transactions had been completed as of the beginning of the periods presented or the financial position that would have occurred if the Merger or Other Merger Transactions had been completed as of the beginning of the periods presented, nor is it necessarily indicative of the future operating results or financial position of the consolidated company. The pro forma information, although helpful in illustrating the financial characteristics of the consolidated company under one set of assumptions, does not reflect the benefits of expected cost savings, opportunities to earn additional revenue, the impact of restructuring, or other factors that may result as a consequence of the Merger or other transactions and, accordingly, does not attempt to predict or suggest future results.

 

    Nine Months Ended
September 30, 2018
     Year Ended
December 31, 2017
 

Enbridge Historical Data:

(C$)

    

Basic earnings per common share

  $ 0.84      $ 1.66  

Diluted earnings per common share

  $ 0.84      $ 1.65  

Dividends declared per common share for the period

  $ 2.013      $ 2.41  

Book value per share (1)

  $ 35.26      $ 34.30  

EEP Historical Data:

(US$)

    

Basic earnings per Class A common unit and i-unit

  $ 0.55      $ 0.50  

Diluted earnings per Class A common unit and i-unit

  $ 0.55      $ 0.50  

Distributions declared per Class A common unit and i-unit for the period

  $ 1.05      $ 1.633  

Book value per Class A common unit and i-unit (1)

  $ 3.96      $ 4.25  

Pro Forma Consolidated Data—Enbridge:

(C$)

    

Basic earnings per common share (2)

  $ 1.20      $ 3.54  

Diluted earnings per common share (2)

  $ 1.20      $ 3.52  

Dividends declared per common share for the period (3)

  $ 2.013      $ 2.41  

Book value per common share at period end (1), (4)

  $ 34.68      $ n/a  

Equivalent Pro Forma Consolidated—EEP (5) :

(C$)

    

Basic earnings per Class A common unit

  $ 0.40      $ 1.19  

Diluted earnings per Class A common unit

  $ 0.40      $ 1.18  

Cash distributions paid for the period per Class A common unit

  $ 0.67      $ 0.81  

Book value per Class A common unit at period end

  $ 11.62      $ n/a  

 

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(1)

Historical book value per Enbridge common share or Class A common unit and i-unit represents total equity before noncontrolling interests and redeemable noncontrolling interests at period end divided by the number of Enbridge common shares or Class A common units and i-units, as applicable, outstanding as of period end.

 

(2)

Amounts are included under “Pro Forma Results” in the unaudited pro forma condensed consolidated statement of earnings included in the Unaudited Pro Forma Condensed Consolidated Pro Forma Financial Statements section on p. F-1.

 

(3)

For the purpose of the pro forma financial information, it was assumed that all Enbridge common shares issued in connection with the Merger and Other Merger Transactions will receive the same dividend rate as existing Enbridge common shares. The actual dividend declared per share may differ from the pro forma information for the periods to which such transactions are given effect.

 

(4)

The pro forma consolidated data—Enbridge, book value per common share was calculated as follows (in Canadian dollars in millions, except per share amounts):

 

     As of September 30, 2018  

Pro forma total Enbridge Inc. shareholders’ equity

   $ 70,056  

Divided by : Pro forma consolidated number of shares outstanding as of date of record

     2,020  

Book value per share (pro forma)

   $ 34.68  

 

(5)

Determined by multiplying the pro forma consolidated data—Enbridge disclosed above by the Exchange Ratio of 0.335 of an Enbridge common share for each Class A common unit.

 

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COMPARATIVE SHARE AND UNIT PRICES; DIVIDENDS AND DISTRIBUTIONS

Enbridge common shares are currently listed on the TSX and the NYSE under the symbol “ENB” and the Class A common units are currently listed on the NYSE under the symbol “EEP”. The table below sets forth, for the periods indicated, the per share high and low sales prices for Enbridge common shares as reported on the TSX and the NYSE and for the Class A common units as reported on the NYSE. Numbers have been rounded to the nearest whole cent.

 

     Enbridge
Common Shares
     Enbridge
Common Shares
     EEP
Class A Common Units
 
     TSX      NYSE      NYSE  
     High      Low      High      Low          High              Low      
     (in C$)      (in US$)      (in US$)  

Annual information for the past five calendar years

                 

2017

     58.28        43.91        44.52        34.39        26.17        12.25  

2016

     59.19        40.03        45.77        27.43        26.37        14.27  

2015

     66.14        40.17        54.43        29.19        41.39        19.31  

2014

     65.13        45.45        57.19        41.08        41.68        26.00  

2013

     49.17        41.47        47.87        37.90        33.49        27.01  

Quarterly information for the past two years and subsequent quarters

                 

2018

                 

Fourth Quarter
(through November 1, 2018)

     44.02        39.40        34.00        29.98        11.48        10.15  

Third Quarter

     47.54        41.66        36.57        32.15        11.90        10.55  

Second Quarter

     47.50        37.36        36.11        29.00        10.95        8.89  

First Quarter

     51.04        38.08        41.21        29.54        15.56        9.05  

2017

                 

Fourth Quarter

     52.59        43.91        42.10        34.39        16.34        12.25  

Third Quarter

     53.00        48.98        42.31        39.01        16.63        13.87  

Second Quarter

     57.75        49.61        42.92        37.37        19.64        14.68  

First Quarter

     58.28        53.87        44.52        40.25        26.17        16.95  

2016

                 

Fourth Quarter

     59.18        53.91        45.09        39.70        26.37        21.78  

Third Quarter

     59.19        50.76        45.77        38.58        25.49        21.97  

Second Quarter

     55.05        48.73        43.39        37.02        23.46        16.86  

First Quarter

     51.31        40.03        39.40        27.43        24.22        14.27  

The above table shows only historical data. You should obtain current market quotations for Enbridge common shares and Class A common units, as the market prices of such securities will fluctuate between the date of this proxy statement/prospectus and the date on which the Merger is completed, at times in between and thereafter. You can obtain these quotations from publicly-available sources.

 

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Comparison of the Market Prices of Enbridge Common Shares and Class A Common Units and Implied Value of the Merger Consideration Payable for Each Class A Common Unit

The following table presents the closing price per share of Enbridge common shares on the TSX and the NYSE and of the Class A common units on the NYSE, in each case on (a) September 17, 2018, the last full trading day prior to the public announcement of the signing of the Merger Agreement, and (b) November 8, 2018, the last practicable trading day prior to the filing of this proxy statement/prospectus with the SEC. This table also shows the estimated implied value of the Merger Consideration payable for each Class A common unit, which was calculated by multiplying the closing price of Enbridge common shares on the NYSE on those dates by the Exchange Ratio of 0.335.

 

     Enbridge
common
shares
     Enbridge
common
shares
     Class A
common
units
     Implied
value per
Class A
common unit
 

Date

   TSX      NYSE      NYSE      NYSE  
     (C$)      (US$)      (US$)      (US$)  

September 17, 2018

   $ 44.70      $ 34.28      $ 11.25      $ 11.48  

November 8, 2018

   $ 43.32      $ 32.90      $ 10.76      $ 11.02  

The market prices of Enbridge common shares and Class A common units have fluctuated since the date of the announcement of the Merger Agreement and will continue to fluctuate prior to, and in the case of Enbridge common shares, after, completion of the Merger. No assurance can be given concerning the market prices of Enbridge common shares or Class A common units before completion of the Merger or of Enbridge common shares after completion of the Merger. The Exchange Ratio is fixed in the Merger Agreement, but the market price of Enbridge common shares (and therefore the value of the Merger Consideration) when received by EEP unitholders after the Merger is completed could be greater than, less than or the same as shown in the table above. Accordingly, these comparisons may not provide meaningful information to EEP unitholders in determining whether to vote to approve the Merger Agreement and the Merger. EEP unitholders are encouraged to obtain current market quotations for Enbridge common shares and Class A common units and to review carefully the other information contained in this proxy statement/prospectus or incorporated by reference herein. For more information, see the section titled “ Where You Can Find More Information ” beginning on page 166.

 

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The table below sets forth the dividends declared per Enbridge common share and the distributions declared per Class A common unit for the periods indicated.

 

     Enbridge      EEP  
     (C$)      (US$)  

Nine Months Ended September 30, 2018

     2.013        1.05  

Year Ended December 31,

     

2017

     2.413        1.633  

Fourth Quarter

     0.610        0.350  

Third Quarter

     0.610        0.350  

Second Quarter

     0.610        0.350  

First Quarter

     0.583        0.583  

2016

     2.120        2.332  

Fourth Quarter

     0.530        0.583  

Third Quarter

     0.530        0.583  

Second Quarter

     0.530        0.583  

First Quarter

     0.530        0.583  

2015

     1.860        2.306  

Fourth Quarter

     0.465        0.583  

Third Quarter

     0.465        0.583  

Second Quarter

     0.465        0.570  

First Quarter

     0.465        0.570  

2014

     1.400        2.197  

Fourth Quarter

     0.350        0.555  

Third Quarter

     0.350        0.555  

Second Quarter

     0.350        0.5435  

First Quarter

     0.350        0.5435  

2013

     1.260        2.174  

Fourth Quarter

     0.3150        0.5435  

Third Quarter

     0.3150        0.5435  

Second Quarter

     0.3150        0.5435  

First Quarter

     0.3150        0.5435  

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This registration statement on Form S-4, of which this proxy statement/prospectus forms a part, and the documents to which Enbridge and EEP refer you in this registration statement, of which this proxy statement/prospectus forms a part, as well as oral statements made or to be made by Enbridge and EEP, contain both historical and forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, and forward-looking information within the meaning of Canadian securities laws (collectively, “forward-looking statements”). Forward-looking statements are typically identified by words such as “anticipate”, “expect”, “project”, “estimate”, “forecast”, “plan”, “intend”, “target”, “believe”, “likely” and similar words suggesting future outcomes or statements regarding an outlook. Forward-looking information or statements included in, or incorporated by reference into, this proxy statement/prospectus include, but are not limited to, statements with respect to the following: the Merger; the Midcoast Transaction; each of the Other Merger Transactions; expected earnings before interest, income taxes and depreciation and amortization (“EBITDA”); expected earnings/(loss); expected earnings/(loss) per share; expected future cash flows; expected performance of the Liquids Pipelines, Gas Transmission and Midstream, Gas Distribution, Green Power and Transmission, and Energy Services businesses; financial strength and flexibility; expectations on sources of liquidity and sufficiency of financial resources; expected costs related to announced projects and projects under construction; expected in-service dates for announced projects and projects under construction (including potentially competitive projects); expected capital expenditures; expected equity funding requirements for Enbridge’s commercially secured growth capital; expected future growth and expansion opportunities; expectations about Enbridge’s joint venture partners’ ability to complete and finance projects under construction; expected closing of acquisitions and dispositions, including the Merger and the Other Merger Transactions; estimated future dividends; expected future actions of regulators; expected costs related to leak remediation and potential insurance recoveries; expectations regarding commodity prices; supply forecasts; expectations regarding the impact of the stock-for-stock merger transaction on February 27, 2017 between Enbridge and Spectra Energy, including Enbridge’s combined scale, financial flexibility, growth capital, future business prospects and performance; impact of the Canadian L3R Program on existing integrity programs; the sponsored vehicle strategy; dividend payout policy; dividend growth and dividend payout expectation; expectations on impact of hedging program; and expectations resulting from the successful execution of Enbridge’s 2018-2020 Strategic Plan.

Although the management of Enbridge and EEP believe that these forward-looking statements are reasonable based on the information available on the date such statements are made and processes used to prepare the information, such statements are not guarantees of future performance and may not prove to be accurate, and readers are cautioned against placing undue reliance on forward-looking statements. By their nature, these statements involve a variety of assumptions, known and unknown risks and uncertainties and other factors, which may cause actual results, future trends, levels of activity and achievements to differ materially from those matters expressed or implied by such statements. When considering forward-looking statements, readers and investors should keep in mind the risk factors and other cautionary statements described in the section titled “ Risk Factors ” beginning on page 33. Among the assumptions, risks and uncertainties that could cause actual results to differ from those described in forward-looking statements are the following:

 

   

the ability to complete the Merger, including as a result of the failure to satisfy a condition to completion of the Merger as specified in the Merger Agreement;

 

   

negative effects from the pendency of the Merger;

 

   

any delays or issues in negotiating the relevant documentation in relation to, and any failure to complete, any or all of the Other Merger Transactions;

 

   

the timing to consummate the Merger;

 

   

the focus of management time and attention on the Merger or the Other Merger Transactions and other disruptions arising from the Merger or the Other Merger Transactions;

 

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the risk that the Merger may not be accretive, and may be dilutive, to Enbridge’s earnings per share, which may negatively affect the market price of Enbridge common shares;

 

   

the possibility that Enbridge and EEP will incur significant transaction and other costs in connection with the Merger, which may be in excess of those anticipated by Enbridge or EEP;

 

   

the risk that any announcements relating to the Merger could have adverse effects on the market price of Enbridge common shares or Class A common units;

 

   

the failure to obtain, delays in obtaining or adverse conditions contained in, any required regulatory or other approvals;

 

   

that EEP and Enbridge may be required to modify the terms and conditions of the Merger Agreement to achieve regulatory or unitholder approval, or that the anticipated benefits of the Merger are not realized as a result of such things as the strength or weakness of the economy and competitive factors in the areas where EEP and Enbridge do business;

 

   

debt and equity market conditions, including the ability to access capital markets on favorable terms or at all, and the cost of debt and equity capital;

 

   

potential changes in the Enbridge share price which may negatively impact the value of consideration offered to EEP unitholders;

 

   

the expected supply of and demand for crude oil, natural gas, natural gas liquids (“NGL”) and renewable energy;

 

   

prices of crude oil, natural gas, NGL and renewable energy;

 

   

competitive changes in Enbridge’s industry (including competition from the same and alternative energy sources);

 

   

exchange rates, including the impact of the movement of the Canadian dollar relative to other currencies, particularly the U.S. dollar;

 

   

inflation; interest rates; availability and price of labor and construction materials; operational reliability; customer and regulatory approvals;

 

   

maintenance of support and regulatory approvals for Enbridge’s projects;

 

   

anticipated in-service dates for Enbridge’s projects and those of its competitors;

 

   

weather and natural disasters;

 

   

the timing and closing of the Other Merger Transactions and Enbridge’s announced dispositions;

 

   

the realization of anticipated benefits and synergies of the Merger, the merger transaction completed in February 2017 with Spectra Energy or the Other Merger Transactions;

 

   

the effects of existing and future governmental legislation;

 

   

the effects of future litigation;

 

   

acquisitions and the timing thereof and the success of integration plans and business plans;

 

   

impact of the dividend policy on Enbridge’s future cash flows;

 

   

credit ratings;

 

   

capital project funding;

 

   

expected EBITDA;

 

   

expected earnings/(loss);

 

   

expected earnings/(loss) per share; and

 

   

expected future cash flows and estimated future dividends.

 

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Assumptions regarding the expected supply of and demand for crude oil, natural gas, NGL and renewable energy, and the prices of these commodities, are material to and underlie all forward-looking statements, as they may impact current and future levels of demand for services of Enbridge or EEP. Similarly, exchange rates, inflation and interest rates impact the economies and business environments in which we operate and may impact levels of demand for services of Enbridge or EEP and cost of inputs, and are therefore inherent in all forward-looking statements. Due to the interdependencies and correlation of these macroeconomic factors, the impact of any one assumption on a forward-looking statement cannot be determined with certainty, particularly with respect to the impact of the Merger and the Other Merger Transactions on us, expected EBITDA, earnings/(loss), earnings/(loss) per share, or estimated future dividends. The most relevant assumptions associated with forward-looking statements on announced projects and projects under construction, including estimated completion dates and expected capital expenditures, include the following: the availability and price of labor and construction materials; the effects of inflation and foreign exchange rates on labor and material costs; the effects of interest rates on borrowing costs; the impact of weather and customer, government and regulatory approvals on construction and in-service schedules and cost recovery regimes.

Forward-looking statements of Enbridge and EEP are subject to risks and uncertainties pertaining to the realization of anticipated benefits and synergies of the Merger, the merger transaction completed in February 2017 with Spectra Energy and the Other Merger Transactions, operating performance, regulatory parameters, dispositions, dividend policy, project approval and support, renewals of rights-of-way, weather, economic and competitive conditions, public opinion, changes in tax laws and tax rates, changes in trade agreements, exchange rates, interest rates, commodity prices, political decisions and supply of and demand for commodities, including but not limited to those risks and uncertainties discussed in this proxy statement/prospectus and in EEP’s other filings with United States securities regulators and other filings with Canadian and United States securities regulators. The impact of any one risk, uncertainty or factor on a particular forward-looking statement is not determinable with certainty as these are interdependent and the future courses of action of Enbridge and SEP depend on management’s assessment of all information available at the relevant time. Except to the extent required by applicable law, Enbridge and EEP each assume no obligation to publicly update or revise any forward-looking statements made in this proxy statement/prospectus or otherwise, whether as a result of new information, future events or otherwise. All subsequent forward-looking statements, whether written or oral, attributable to Enbridge or EEP or persons acting on behalf of Enbridge or EEP, are expressly qualified in their entirety by these cautionary statements.

The aforementioned factors are difficult to predict and in many cases may be beyond Enbridge’s and EEP’s control. Consequently, these forward-looking statements may not prove to be accurate. There is no assurance that the actions, events or results of the forward-looking statements will occur, or, if any of them do, when they will occur or what effect they will have on results of operations, financial condition, cash flows or dividends/distributions of Enbridge or EEP. In view of these uncertainties, Enbridge and EEP caution that investors should not place undue reliance on any forward-looking statements. All of the forward-looking statements Enbridge and EEP make in this document are qualified by the information contained or incorporated by reference herein, including, but not limited to, the information contained under this heading and the information detailed (a) in Enbridge’s Annual Report on Form 10-K filed with the SEC for the fiscal year ended December 31, 2017 and Enbridge’s Quarterly Reports on Form 10-Q filed with the SEC for the quarterly periods ended March 31, 2018, June 30, 2018 and September 30, 2018, which are available at http://www.sec.gov , and (b) in EEP’s Annual Report on Form 10-K filed with the SEC for the fiscal year ended December 31, 2017 and EEP’s Quarterly Reports on Form 10-Q filed with the SEC for the quarterly periods ended March 31, 2018, June 30, 2018 and September 30, 2018, which are available at http://www.sec.gov . See the section titled “ Where You Can Find More Information ” beginning on page 166. Further, any forward-looking statement speaks only as of the date on which it is made, and, except as required by applicable law, Enbridge and EEP undertake no obligation to update or revise any forward-looking statement made in this proxy statement/prospectus to reflect new information, events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. All subsequent forward-looking statements, whether written or oral, attributable to Enbridge or EEP or persons acting on their behalf, are expressly qualified in their entirety by these cautionary statements.

 

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RISK FACTORS

In addition to the other information contained in or incorporated by reference herein, including the matters addressed in the section titled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 30, you should consider carefully the following risk factors, as well as the other information set forth in and incorporated by reference into this proxy statement/prospectus, before making a decision on the Merger. As an Enbridge shareholder following completion of the Merger, you will be subject to all risks inherent in the business of Enbridge in addition to the risks related to EEP. The market value of your Enbridge common shares will reflect the performance of the business relative to, among other things, that of the competitors of Enbridge and EEP and general economic, market and industry conditions. The value of your investment may increase or may decline and could result in a loss. You should also consider the other information in this proxy statement/prospectus and the other documents incorporated by reference herein, particularly the risk factors contained in Enbridge’s and EEP’s Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. See the section titled “Where You Can Find More Information” beginning on page 166.

Risks Related to the Merger

The number of Enbridge common shares that holders of Class A common units will be entitled to receive in the Merger is based upon a fixed Exchange Ratio and will not be adjusted in the event of any change in either the price of Enbridge common shares or the price of Class A common units.

The Exchange Ratio of 0.335 of an Enbridge common share per Class A common unit is fixed, meaning that it does not change and is not dependent upon the relative values of Enbridge common shares and Class A common units. There will be no adjustment to the Exchange Ratio for changes in the market price of Enbridge common shares or Class A common units prior to the completion of the Merger. If the Merger is completed, there will be a time lapse between the date of this proxy statement/prospectus and the date on which holders of the Class A common units who are entitled to receive the Merger Consideration actually receive such Merger Consideration. The market value of Enbridge common shares may fluctuate during and after this period as a result of a variety of factors, including general market and economic conditions, changes in Enbridge’s businesses, operations and prospects and regulatory considerations. Such factors are difficult to predict and in many cases may be beyond the control of Enbridge and EEP. Consequently, at the time EEP unitholders must decide whether to approve the Merger Agreement, they will not know the actual market value of the Merger Consideration they will receive when the Merger is completed. The actual value of the Merger Consideration received by the holders of the Class A common units at the completion of the Merger will depend on the market value of the Enbridge common shares at that time. This market value may differ, possibly materially, from the market value of Enbridge common shares at the time the Merger Agreement was entered into or at any other time. For additional information about the EEP per unit merger consideration, see the section titled “ The Merger Agreement—Merger Consideration ” beginning on page 101.

The Merger Agreement may be terminated in accordance with its terms and there is no assurance when or if the Merger will be completed.

The completion of the Merger is subject to the satisfaction or waiver of a number of conditions as set forth in the Merger Agreement, including, among others, the requisite approval of the EEQ shareholders, including the receipt of the Majority of the Minority Vote, the accuracy of representations and warranties under the Merger Agreement (subject to the materiality standards set forth in the Merger Agreement) and EEP’s and Enbridge’s performance of their respective obligations under the Merger Agreement in all material respects. These conditions to the closing of the Merger may not be fulfilled in a timely manner or at all, and, accordingly, the Merger may be delayed or may not be completed.

There can be no assurance as to when these conditions will be satisfied or waived, if at all, or that other events will not intervene to delay or result in the failure to complete the Merger.

 

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In addition, if the Merger is not completed by March 18, 2019, either Enbridge or EEP may choose not to proceed with the Merger, and the parties can mutually decide to terminate the Merger Agreement at any time. In addition, Enbridge and EEP may elect to terminate the Merger Agreement in certain other circumstances. Please read the section titled “ The Merger Agreement—Termination ” beginning on page 120.

The opinion rendered to the Special Committee by Evercore on September 17, 2018, was based on Evercore’s financial analyses performed by Evercore and reviewed with the Special Committee, which considered financial, economic, market and other conditions then in effect, and financial forecasts and other data provided by management of Enbridge and EEP, as applicable, as of the date of the opinion. As a result, the opinion does not reflect changes in events or circumstances after the date of such opinion. The Special Committee has not requested, and does not expect to request, an updated opinion from Evercore reflecting changes in circumstances that may have occurred since the signing of the Merger Agreement.

The opinion rendered to the Special Committee by Evercore on September 17, 2018, was provided in connection with, and at the time of, the evaluation of the Merger and the Merger Agreement by the Special Committee. The opinion was based on the financial analyses performed by Evercore and reviewed with the Special Committee, which considered financial, economic, market and other conditions then in effect, and financial forecasts and data provided by management of Enbridge and EEP, as of the date of the opinion, which may have changed, or may change, after the date of the opinion. The Special Committee has not requested an updated opinion as of the date of this proxy statement/prospectus from Evercore and does not expect to request an updated opinion prior to completion of the Merger. Changes in the operations and prospects of Enbridge and EEP, general market and economic conditions and other factors that may be beyond the control of Enbridge and EEP, and on which the opinion was based, may have altered the value of Enbridge or EEP or the prices of Enbridge common shares or Class A common units since the date of such opinion, or may alter such values and prices by the time the Merger is completed. The opinion does not speak as of any date other than the date of the opinion. For a description of the opinion that Evercore rendered to the Special Committee, please read the section titled “ The Merger—Opinion of Evercore—Financial Advisor to the Special Committee ” beginning on page 78.

Failure to complete, or significant delays in completing, the Merger could negatively affect the trading prices of Enbridge common shares or the Class A common units or the future business and financial results of Enbridge and EEP.

The completion of the Merger is subject to certain customary closing conditions, including (1) the registration statement having become effective under the Securities Act, (2) the receipt of requisite approvals of the Merger Agreement by the limited partners of EEP, including the receipt of the Majority of the Minority Vote, (3) the expiration or termination of the waiting period applicable to the consummation of the Merger under the HSR Act, (4) the Enbridge common shares issuable in connection with the Merger having been approved for listing on the NYSE and the TSX, subject to official notice of issuance, and (5) the absence of any governmental order prohibiting the consummation of the Merger or the other transactions contemplated by the Merger Agreement. The obligation of each party to consummate the Merger is also conditioned upon the accuracy of the representations and warranties of the other party as of the date of the Merger Agreement and as of the closing (subject to customary materiality qualifiers).

There is no certainty that the various closing conditions will be satisfied and that the necessary approvals will be obtained. If these or other conditions are not satisfied or if there is a delay in the satisfaction of such conditions, then Enbridge and EEP may not be able to complete the Merger timely or at all, and such failure or delay may have other adverse consequences. If the Merger is not completed or is delayed, Enbridge and EEP will be subject to a number of risks, including:

 

   

Enbridge and EEP may experience negative reactions from the financial markets, including negative impacts on the market price of Enbridge common shares and Class A common units, particularly to the extent that their current market price reflects a market assumption that the Merger will be completed;

 

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Enbridge and EEP will not realize the expected benefits of the combined company; and

 

   

some costs relating to the Merger, such as investment banking, legal and accounting fees, and financial printing and other related charges, must be paid even if the Merger is not completed.

Enbridge also expects to acquire all of the outstanding equity securities of each of EEQ, SEP and ENF in the Other Merger Transactions, and Enbridge’s efforts to complete those transactions may result in delays in completing the Merger with EEP or make it more difficult or time consuming than expected.

Enbridge announced that it had separately entered into definitive agreements to acquire, in separate combination transactions, all of the outstanding equity securities that Enbridge does not already own of SEP (announced on August 24, 2018) and EEQ and ENF (each announced on September 18, 2018). EEQ will hold a special meeting of its shareholders to obtain their approval of the applicable merger agreement. Completion of the EEQ merger is contingent on the completion of the Merger, while none of the Merger or the SEP merger are conditioned on the completion of any of such other transactions. SEP will solicit consents in order to obtain the requisite approval of the SEP unitholders. The consents of Enbridge and its subsidiaries (other than SEP) to the SEP merger are sufficient to approve the SEP merger and the related merger agreement. On November 8, 2018, Enbridge and ENF completed the previously announced ENF plan of arrangement pursuant to Section 193 of the Business Corporations Act (Alberta). Enbridge cannot predict whether the Other Merger Transactions (other than the ENF plan of arrangement) will be approved by the requisite votes of security holders of the respective sponsored vehicles, whether all of the other conditions precedent to such transactions will be satisfied or, if so, the timing of the completion of such transactions. Enbridge’s efforts to complete those transactions may result in delays in completing the Merger with EEP or make it more difficult or time consuming than expected.

The assumptions and estimates underlying the financial projections are inherently subject to significant business, economic and competitive uncertainties and contingencies, all of which are difficult to predict and many of which are beyond the control of Enbridge and EEP. As a result, the financial projections for Enbridge and EEP may not be realized.

In performing its financial analyses and rendering its opinion regarding the fairness, from a financial point of view, of the Exchange Ratio to EEP and the holders of Class A common units other than Enbridge and its affiliates, Evercore, the financial advisor to the Special Committee, reviewed and relied on, among other things, financial forecasts and other data for Enbridge and EEP prepared by management of Enbridge and EEP, as applicable. These financial projections speak only as of the date made and will not be updated. These financial projections were not provided with a view to public disclosure, are subject to significant economic, competitive, industry and other uncertainties, and may not be achieved in full, within projected time frames or at all. The financial projections on which the Special Committee’s financial advisor based its opinion may not be realized.

The unaudited pro forma condensed consolidated financial information and unaudited forecasted financial information included in this proxy statement/prospectus is presented for illustrative purposes only and does not represent the actual financial position or results of operations of the combined company following the completion of the Merger. Future results of Enbridge and EEP may differ, possibly materially, from the unaudited pro forma condensed consolidated financial information and unaudited forecasted financial information presented in this proxy statement/prospectus.

The unaudited pro forma condensed consolidated financial statements and unaudited forecasted financial information contained in this proxy statement/prospectus are presented for illustrative purposes only, contain a variety of adjustments, assumptions and preliminary estimates and do not represent the actual financial position or results of operations of Enbridge or EEP prior to the Merger or following the Merger, the Midcoast Transaction and/or the Other Merger Transactions for several reasons. See the Unaudited Pro Forma Condensed Consolidated Financial Statements section beginning on page F-1. In addition, the Merger and post-Merger integration process, as well as the Other Merger Transactions, may give rise to unexpected liabilities and costs. Unexpected delays in completing the Merger, or in completing the Other Merger Transactions, may significantly

 

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increase the related costs and expenses incurred by Enbridge. The actual financial positions and results of operations of Enbridge and EEP prior to the Merger and following the Merger, the Midcoast Transaction and the Other Merger Transactions may be different, possibly materially, from the unaudited pro forma condensed consolidated financial statements or forecasted financial information included in this proxy statement/prospectus. In addition, the assumptions used in preparing the unaudited pro forma condensed consolidated financial statements and forecasted financial information included in this proxy statement/prospectus may not prove to be accurate and may be affected by other factors. Any significant changes in the market price of Enbridge common shares may cause a significant change in the purchase price used for Enbridge’s accounting purposes and the unaudited pro forma financial statements contained in this proxy statement/prospectus.

Enbridge, the GP Delegate and the General Partner and their directors and officers may have interests that differ from your interests, and these interests may have influenced their decision to propose and to approve the Merger Agreement and the transactions contemplated thereby, including the Merger.

The nature of the respective businesses of Enbridge and EEP and their respective affiliates may give rise to conflicts of interest between Enbridge, the General Partner and the GP Delegate, which manages the affairs and business of EEP through a delegation of control agreement among EEP, the General Partner and the GP Delegate. The interests of Enbridge, the General Partner and the GP Delegate, and their directors and officers, as applicable, may differ from your interests as a result of the relationships among them. A conflict could be perceived to exist, for example, in connection with the number of Enbridge common shares offered as the Merger Consideration, particularly where two of the ten directors on the GP Delegate Board and the GP Board are executive officers of Enbridge.

EEP does not have any employees and relies on the GP Delegate to manage the conduct of EEP’s business. All directors of the General Partner are elected annually and may be removed by Enbridge (U.S.) Inc., as the sole shareholder of the General Partner, an indirect and wholly owned subsidiary of Enbridge. All directors of EEQ were elected and may be removed by the General Partner, as the sole holder of EEQ’s voting shares.

Furthermore, the EEP Partnership Agreement contains provisions that limit the General Partner and GP Delegate’s fiduciary duties to EEP or any EEP unitholders, and the resolution or course of action in respect of any actual or potential conflict of interest will not constitute a breach of the EEP Partnership Agreement, or any agreement contemplated thereby, if such resolution or course of action is, or by operation of the EEP Partnership Agreement, is deemed to be, fair and reasonable to EEP.

In considering the recommendation of the GP Delegate Board and the GP Board to approve the Merger proposal, you should consider that the directors and executive officers of Enbridge, the General Partner and the GP Delegate may have other interests that differ from, or are in addition to, the interests of EEP unitholders generally. These interests include the following:

 

   

six of the ten directors of the General Partner and GP Delegate also hold positions at Enbridge or its subsidiaries (other than the General Partner or the GP Delegate);

 

   

seven directors, including three non-management directors of the General Partner and GP Delegate own Enbridge common shares. Those directors, individually and in the aggregate, own shares representing less than 1.0% of the Enbridge common shares outstanding as of November 5, 2018;

 

   

all of the executive officers of the General Partner and the GP Delegate hold positions at Enbridge or its subsidiaries (other than the General Partner or the GP Delegate);

 

   

12 individuals who serve as executive officers of the General Partner, and 11 individuals who serve as executive officers of the GP Delegate, own Enbridge common shares, which, individually and in the aggregate, represent less than 1.0% of the Enbridge common shares outstanding as of November 5, 2018;

 

   

the three directors on the Special Committee also serve on the EEQ Special Committee;

 

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seven of the ten directors of the General Partner and the GP Delegate, including two directors on the Special Committee, are defendants in the Derivative Action; and

 

   

all of the directors and executive officers of the General Partner and GP Delegate have the right to indemnification under the EEP Partnership Agreement and the Merger Agreement. In addition, all of the directors and officers of Enbridge have the right to indemnification under the organizational documents of Enbridge and indemnification agreements with Enbridge.

In addition, certain executive officers and directors of Enbridge are also executive officers and directors of the General Partner and the GP Delegate. J. Herbert England serves as a member of the boards of directors of all three companies. The compensation received by the executive officers of Enbridge is paid to them in their capacities as executive officers of Enbridge, the General Partner and the GP Delegate, as applicable. The General Partner and the GP Delegate have the same directors and, with the exception of William Yardley, who is an executive officer of the General Partner only, have the same executive officers.

The following director and executive officers of Enbridge hold positions at the General Partner and the GP Delegate:

 

Executive Officer/Director

  

General Partner
/ GP Delegate

  

Enbridge

J. Herbert England

  

Director

  

Director

D. Guy Jarvis

  

Director and Executive Vice President—Liquids Pipelines

  

Executive Vice President & President, Liquids Pipelines

John K. Whelen

  

Director

  

Executive Vice President & Chief Financial Officer

The members of the Special Committee, GP Delegate Board and GP Board were aware of and considered these interests, among other matters, when they approved the Merger Agreement and when they recommended that EEP unitholders approve the Merger. These interests are described in more detail in the section titled “ The Merger—Interests of Directors and Executive Officers of the GP Delegate and the General Partner in the Merger ” beginning on page 96.

EEP effectively does not have the ability to enter into certain alternatives to the Merger that are not approved by Enbridge.

As of November 5, 2018, Enbridge and its subsidiaries (other than the GP Delegate) held and were entitled to vote, in the aggregate, Class A common units, Class B common units and Class E units of EEP, and the GP Delegate’s shares corresponding to i-units of EEP, representing approximately 32.9% of the Outstanding EEP units. Accordingly, certain alternative transactions to the Merger entered into by EEP would need to be approved by Enbridge. Because Enbridge controls the voting of approximately 32.9% of the Outstanding EEP units, Enbridge can effectively block EEP from entering into alternative transactions to the Merger that require the approval of the EEP unitholders representing two-thirds of the outstanding EEP units that Enbridge does not support, which could discourage third parties that may have an interest in acquiring all or a significant part of EEP from considering or proposing that transaction.

Enbridge and EEP will be subject to certain operating restrictions until the completion of the Merger.

The Merger Agreement generally restricts EEP, without Enbridge’s consent, or Enbridge, without EEP’s consent, from taking specified actions until the Merger occurs or the Merger Agreement terminates. These restrictions may prevent EEP or Enbridge from taking actions that each respectively might otherwise consider beneficial. Please read the section titled “ The Merger Agreement—Interim Operations ” beginning on page 109.

 

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Risks Related to the Enbridge Common Shares

The market price of Enbridge common shares will continue to fluctuate after the Merger.

Upon completion of the Merger, Unaffiliated EEP Unitholders will become holders of Enbridge common shares. The market price of Enbridge common shares may fluctuate significantly following completion of the Merger and Unaffiliated EEP Unitholders could lose some or all of the value of their investment in Enbridge common shares. In addition, the stock market has experienced significant price and volume fluctuations in recent times which, if they continue to occur, could have a material adverse effect on the market for, or liquidity of, the Enbridge common shares, regardless of Enbridge’s actual operating performance.

The market price of Enbridge common shares may be affected by factors different from those that historically have affected Class A common units.

Upon completion of the Merger, Unaffiliated EEP Unitholders will become holders of Enbridge common shares. The businesses of Enbridge differ from those of EEP in certain respects, and, accordingly, the financial position or results of operations and/or cash flows of Enbridge after the Merger, as well as the market price of Enbridge common shares, may be affected by factors different from those currently affecting the financial position or results of operations and/or cash flows of EEP, and, in turn, the market price of the Class A common units. For a discussion of the businesses of Enbridge and EEP and of some important factors to consider in connection with those businesses, see the section titled “ Information about the Companies ” beginning on page 43, and the documents incorporated by reference in the section titled “ Where You Can Find More Information ” beginning on page 166, including, in particular, in the sections titled “Risk Factors” in each of Enbridge’s Annual Report on Form 10-K for the year ended December 31, 2017 and EEP’s Annual Report on Form 10-K for the year ended December 31, 2017, in each case, as modified by subsequent reports filed by Enbridge and EEP.

Holders of Enbridge common shares, which will be received by eligible holders of the Class A common units as a result of the Merger, will have rights different from the current holders of Class A common units.

Upon completion of the Merger, Unaffiliated EEP Unitholders will no longer be unitholders of EEP, and Unaffiliated EEP Unitholders will become Enbridge shareholders. There are certain differences between the current rights of Unaffiliated EEP Unitholders and the rights to which such unitholders will be entitled as Enbridge shareholders. See the section titled “ Comparison of Rights of Enbridge Shareholders and EEP Unitholders ” beginning on page 131 for a discussion of the different rights associated with Enbridge common shares.

Enbridge may not pay any cash dividends to Enbridge shareholders, and Enbridge’s ability to declare and pay cash dividends to Enbridge shareholders, if any, in the future will depend on various factors, many of which are beyond Enbridge’s control.

Unlike EEP, Enbridge is not required to declare dividends of its available cash to its equity holders. The Enbridge Board may not declare dividends in the future. Should the Enbridge Board declare dividends on the Enbridge common shares in the future, the dividend yield of the Enbridge common shares may only be a fraction of the historical or projected dividend yield of the Class A common units. Any payment of future dividends will be at the sole discretion of the Enbridge Board and will depend upon many factors, including the financial condition, earnings and capital requirements of its operating subsidiaries, covenants associated with certain debt obligations, legal requirements, regulatory constraints and other factors deemed relevant by the Enbridge Board. For more information regarding Enbridge’s financial condition, earnings and capital requirements, level of indebtedness or legal, regulatory or contractual restrictions, please read Enbridge’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, incorporated by reference herein.

 

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Enbridge declares its dividend in Canadian dollars. However, Enbridge delivers payment to U.S. holders of Enbridge common shares in U.S. dollars. Fluctuations in the Canadian dollar/U.S. dollar exchange rate may impact the value of dividend payments received by U.S. holders of Enbridge common shares.

Enbridge declares its dividend in Canadian dollars. However, Enbridge delivers payment to U.S. holders of Enbridge common shares in U.S. dollars. The U.S. dollar value of any cash payment for declared dividends to a U.S. holder of Enbridge common shares will be converted into U.S. dollars using the indicative rate of exchange for Canadian interbank transactions established by the Bank of Canada on the declared record date. Fluctuations in the Canadian dollar/U.S. dollar exchange rate may impact the value of any dividend payments received by U.S. holders of Enbridge common shares.

Enbridge is organized under the laws of Canada and a substantial portion of its assets are, and many of its directors and officers reside, outside of the United States. As a result, it may not be possible for shareholders to enforce civil liability provisions of the securities laws of the United States in Canada.

Enbridge is organized under the laws of Canada. A substantial portion of Enbridge’s assets are located outside the United States, and many of Enbridge’s directors and officers and some of the experts named in this proxy statement/prospectus (including in documents that are incorporated by reference into this proxy statement/prospectus) are residents of jurisdictions outside of the United States. As a result, it may be difficult for investors to effect service within the United States upon Enbridge and those directors, officers and experts, or to realize in the United States upon judgments of courts of the United States predicated upon civil liability of Enbridge and such directors, officers or experts under the U.S. federal securities laws. There is uncertainty as to the enforceability in Canada by a court in original actions, or in actions to enforce judgments of United States courts, of the civil liabilities predicated upon the U.S. federal securities laws.

There may be future dilution of the Enbridge common shares, including as a result of any Enbridge common shares issued in connection with the Other Merger Transactions, which could adversely affect the market price of Enbridge common shares.

If the Merger is successfully completed, Enbridge expects that it will issue to the Unaffiliated EEP Unitholders approximately 72,256,181 Enbridge common shares at the Effective Time in connection with the Merger, based on the number of Enbridge common shares and the estimated number of Class A common units that are outstanding as of November 5, 2018 (not including any Enbridge common shares that would be expected to be issued upon the successful completion of the Other Merger Transactions). If the Other Merger Transactions are all also successfully completed in accordance with their respective transaction agreements, based on the number of outstanding shares or units, as the case may be, of EEP, EEQ, SEP and ENF, as of November 5, 2018, and the exchange ratio in each applicable transaction agreement, Enbridge expects that it will issue approximately 296,284,573 Enbridge common shares in aggregate upon the completion of the proposed Merger and those Other Merger Transactions. The actual number of Enbridge common shares issued in the Merger will be determined by multiplying the Exchange Ratio by the number of issued and outstanding Class A common units held by Unaffiliated EEP Unitholders as of the closing date of the Merger. The actual number of Enbridge common shares issued in each of the Other Merger Transactions will be determined by multiplying the applicable exchange ratio by the number of publicly held shares or units of the acquired entity as of the closing date of each such transaction.

In addition, the Merger Agreement does not restrict Enbridge’s ability to issue additional Enbridge common shares prior to (with consent of each conflicts committee and special committee pursuant to the respective merger agreements and arrangement agreement applicable to the proposed Merger and the Other Merger Transactions) or following the Effective Time or thereafter. In the future (assuming such consents have been secured), Enbridge may issue additional Enbridge common shares to raise cash for its projects, operations, acquisitions or other purposes. Enbridge may also (assuming such consents have been secured) acquire interests in other companies by using a combination of cash and Enbridge common shares or just Enbridge common shares.

 

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Enbridge has issued securities convertible into, or exchangeable for, or that represent the right to receive, Enbridge common shares and may (assuming such consents have been secured) do so again in the future. Any of these events may dilute the ownership interests of current Enbridge common shares, reduce Enbridge’s earnings per share and have an adverse effect on the price of Enbridge common shares. The issuance of these new shares and the sale of additional shares that may become eligible for sale in the public market from time to time could have the effect of depressing the market value for Enbridge common shares. The increase in the number of Enbridge common shares may lead to sales of such Enbridge common shares or the perception that such sales may occur, either of which may adversely affect the market for, and the market value of, Enbridge common shares.

Sales of a substantial number of Enbridge common shares in the public market could adversely affect the market price of Enbridge common shares.

Sales of a substantial number of Enbridge common shares in the public market, or the perception that these sales may occur, could reduce the market price of Enbridge common shares.

Tax Risks Related to the Merger and the Ownership of Enbridge Common Shares Received in the Merger

In addition to reading the following risk factors, EEP unitholders are urged to read “ Material U.S. Federal Income Tax Consequences of the Merger ” and “ Material Canadian Federal Income Tax Consequences of the Merger ” for a more complete discussion of the expected U.S. and Canadian federal income tax consequences of the Merger and owning and disposing of Enbridge common shares received in the Merger.

The Merger should be a taxable transaction for U.S. federal income tax purposes and, in such case, the resulting tax liability of an EEP unitholder, if any, will depend on such unitholder’s particular situation. The tax liability of an EEP unitholder as a result of the Merger could be more than expected.

EEP unitholders will receive Enbridge common shares and cash in lieu of fractional shares, if any, as the Merger Consideration. Although EEP unitholders will receive no cash consideration other than any cash received in lieu of fractional shares, if any, the Merger should be treated as a taxable sale by EEP unitholders for U.S. federal income tax purposes. In such case, as a result of the Merger, an EEP unitholder will recognize gain or loss for U.S. federal income tax purposes equal to the difference between such unitholder’s amount realized and the unitholder’s adjusted tax basis in the Class A common units. The amount of gain or loss recognized by each EEP unitholder in the Merger will vary depending on each unitholder’s particular situation, including the value of the Enbridge common shares and the amount of cash in lieu of fractional shares, if any, received by each unitholder in the Merger, the adjusted tax basis of the Class A common units exchanged by each unitholder in the Merger, and the amount of any suspended passive losses that may be available to a particular unitholder to offset a portion of the gain recognized by the unitholder.

Because the value of any Enbridge common shares received in the Merger will not be known until the Effective Time of the Merger, an EEP unitholder will not be able to determine its amount realized, and therefore its taxable gain or loss, until such time. In addition, because prior distributions in excess of an EEP unitholder’s allocable share of EEP’s net taxable income decrease such EEP unitholder’s tax basis in its Class A common units, the amount, if any, of such prior excess distributions with respect to such Class A common units will, in effect, become taxable income to an EEP unitholder if the aggregate value of the consideration received in the Merger is greater than such EEP unitholder’s adjusted tax basis in its Class A common units, even if the aggregate value of the consideration received in the Merger is less than such EEP unitholder’s original cost basis in its Class A common units. Furthermore, a portion of this gain or loss, which portion could be substantial, will be separately computed and taxed as ordinary income or loss to the extent attributable to assets giving rise to depreciation recapture or other “unrealized receivables” or to “inventory items” owned by EEP.

For a more complete discussion of certain U.S. federal income tax consequences of the Merger, please read “ Material U.S. Federal Income Tax Consequences of the Merger ” beginning on page 125.

 

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The U.S. federal income tax treatment of EEP unitholders with respect to owning and disposing of any Enbridge common shares received in the Merger will be different than their U.S. federal income tax treatment with respect to owning and disposing of their Class A common units and dividends paid with respect to Enbridge common shares generally will be subject to withholding tax.

EEP is classified as a partnership for U.S. federal income tax purposes and, generally, is not subject to entity-level U.S. federal income taxes. Instead, each EEP unitholder is required to take into account such unitholder’s share of items of income, gain, loss, and deduction of EEP in computing its U.S. federal income tax liability, regardless of whether cash distributions are made to such EEP unitholder by EEP. A distribution of cash by EEP to an EEP unitholder who is a U.S. holder (as defined in the section titled “ Material U.S. Federal Income Tax Consequences of the Merger ” beginning on page 125) is generally not taxable for U.S. federal income tax purposes unless the amount of cash distributed is in excess of the EEP unitholder’s adjusted tax basis in its Class A common units. In contrast, Enbridge is classified as a corporation for U.S. federal income tax purposes, and thus, Enbridge and its subsidiaries (and not the Enbridge shareholders) are subject to taxation on their taxable income. A distribution of cash by Enbridge to a shareholder who is a U.S. holder will generally be included in such U.S. holder’s income as ordinary dividend income to the extent of Enbridge’s current or accumulated “earnings and profits”, as determined under U.S. federal income tax principles. A portion of the cash distributed to Enbridge shareholders by Enbridge after the Merger may exceed Enbridge’s current and accumulated earnings and profits. Cash distributions in excess of Enbridge’s current and accumulated earnings and profits will be treated as a non-taxable return of capital, reducing a U.S. holder’s adjusted tax basis in such shareholder’s Enbridge common shares and, to the extent the cash distribution exceeds such shareholder’s adjusted tax basis, as gain from the sale or exchange of such Enbridge common shares. However, Enbridge does not expect to calculate earnings and profits in accordance with U.S. federal income tax principles. Accordingly, each Enbridge shareholder should expect to generally treat distributions made by Enbridge as dividends.

Dividends paid or credited or deemed to be paid or credited on Enbridge common shares to a Non-Canadian Resident Holder generally will be subject to Canadian withholding tax at a rate of 25% of the gross amount of the dividend, unless the rate is reduced under the provisions of an applicable income tax convention between Canada and the Non-Canadian Resident Holder’s jurisdiction of residence. For example, the rate of withholding tax under the Treaty applicable to a Non-Canadian Resident Holder who is a resident of the United States for purposes of the Treaty, is the beneficial owner of the dividend and is entitled to all of the benefits under the Treaty, generally will be 15%.

Please read “Material U.S. Federal Income Tax Consequences of the Merger” and “Material Canadian Federal Income Tax Consequences of the Merger” for a more complete discussion of certain U.S. and Canadian federal income tax consequences of owning and disposing of Enbridge common shares.

Future changes to U.S., Canadian and foreign tax laws could adversely affect the combined company.

The U.S. Congress, the Canadian House of Commons, the Organization for Economic Co-operation and Development, and other government agencies in jurisdictions where Enbridge and its affiliates do business have been focused on issues related to the taxation of multinational corporations. Specific attention has been paid to “base erosion and profit shifting”, where payments are made between affiliates from a jurisdiction with high tax rates to a jurisdiction with lower tax rates. As a result, the tax laws in the United States, Canada and other countries in which Enbridge and its affiliates do business could change on a prospective or retroactive basis, and any such change could adversely affect the combined company.

Further, there can be no assurance that applicable Canadian income tax laws, regulations or tax treaties will not be changed or interpreted in a manner that is, or that applicable taxing authorities will not take administrative positions that are, adverse to Enbridge and its shareholders. Such taxation authorities may also disagree with how Enbridge calculates or has in the past calculated its income for tax purposes. Any such event could adversely affect Enbridge, its share price or the dividends or other payments to be paid to shareholders of Enbridge.

 

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Risks Related to Enbridge’s Business

You should read and consider risk factors specific to Enbridge’s businesses that will also affect the combined company after the completion of the Merger. These risks are described in Part I, Item 1A of Enbridge’s Annual Report on Form 10-K for the year ended December 31, 2017, and in other documents that are incorporated by reference herein. See the section titled “ Where You Can Find More Information ” beginning on page 166 for the location of information incorporated by reference in this proxy statement/prospectus.

Risks Related to EEP’s Business

You should read and consider risk factors specific to EEP’s businesses that will also affect the combined company after the completion of the Merger. These risks are described in Part I, Item 1A of EEP’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, and in other documents that are incorporated by reference herein. See the section titled “ Where You Can Find More Information ” beginning on page 166 for the location of information incorporated by reference in this proxy statement/prospectus.

 

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INFORMATION ABOUT THE COMPANIES

Enbridge Inc.

200, 425 - 1st Street S.W.

Calgary, Alberta T2P 3L8, Canada

Phone: 1-403-231-3900

Enbridge is a North American energy infrastructure company with strategic business platforms that include an extensive network of crude oil, liquids and natural gas pipelines, regulated natural gas distribution utilities and renewable power generation assets. Enbridge delivers an average of 2.9 million barrels of crude oil each day through its Mainline and Express Pipeline, and accounts for approximately 62% of United States-bound Canadian crude oil exports. Enbridge also moves approximately 22% of all natural gas consumed in the United States, serving key supply basins and demand markets. Its regulated utilities serve approximately 3.7 million retail customers in Ontario, Quebec and New Brunswick. Enbridge also has interests in more than 1,700 megawatts (MW) of net renewable power generation capacity in North America and Europe. Enbridge has ranked on the Global 100 Most Sustainable Corporations index for the past nine years. Enbridge was incorporated on April 13, 1970 under the Companies Ordinance of the Northwest Territories and was continued under the Canada Corporations Act on December 15, 1987. Enbridge indirectly holds all of the outstanding equity interests of Merger Sub, an indirect wholly owned subsidiary formed in Delaware for the sole purpose of completing the Merger.

Enbridge is a public company and the Enbridge common shares trade on both the TSX and the NYSE under the ticker symbol “ENB”. Enbridge’s principal executive offices are located at 200, 425 - 1st Street S.W., Calgary, Alberta T2P 3L8, Canada, and its telephone number is 1-403-231-3900.

Additional information about Enbridge can be found on its website at https://www.enbridge.com . The information contained in, or that can be accessed through, Enbridge’s website is not intended to be incorporated into this proxy statement/prospectus. For additional information about Enbridge, see the section titled “ Where You Can Find More Information ” beginning on page 166.

Enbridge Energy Partners, L.P.

5400 Westheimer Court

Houston, Texas 77056

Phone: (713) 627-5400

EEP is a publicly-traded Delaware limited partnership that owns and operates crude oil and liquid petroleum transportation and storage assets and natural gas gathering, treating, processing, transportation and marketing assets in the United States. EEP was formed in 1991 by the General Partner to own and operate the Lakehead System, which is the U.S. portion of a crude oil and liquid petroleum pipeline system extending from western Canada through the upper and lower Great Lakes region of the United States to eastern Canada (Mainline System). A subsidiary of Enbridge owns the Canadian portion of the Mainline System. Enbridge is the ultimate parent of the General Partner.

The GP Delegate is a Delaware limited liability company that was formed in May 2002 to manage EEP’s business and affairs. Under a delegation of control agreement, the General Partner delegated substantially all of its power and authority to manage and control EEP’s business and affairs to the GP Delegate. The General Partner, through its direct ownership of the voting shares of the GP Delegate, elects all of the directors of the GP Delegate. The GP Delegate is the sole owner of all of EEP’s i-units.

EEP’s executive offices are located at 5400 Westheimer Court, Houston, Texas 77056, and its telephone number is (713) 627-5400.

 

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Additional information about EEP can be found on its website at https://www.enbridgepartners.com . The information contained in, or that can be accessed through, EEP’s website is not intended to be incorporated into this proxy statement/prospectus. For additional information about EEP, see the section titled “ Where You Can Find More Information ” beginning on page 166.

Merger Sub

5400 Westheimer Court

Houston, Texas 77056

Phone: (713) 627-5400

Merger Sub, a Delaware limited liability company and an indirect wholly owned subsidiary of Enbridge, was formed solely for the purpose of facilitating the Merger. Merger Sub has not carried on any activities or operations to date, except for those activities incidental to its formation and undertaken in connection with the transactions contemplated by the Merger Agreement. By operation of the Merger, Merger Sub will be merged with and into EEP. As a result, EEP will survive the Merger as a wholly owned subsidiary of Enbridge. Upon completion of the Merger, Merger Sub will cease to exist as a separate entity.

Merger Sub’s principal executive offices are located at 5400 Westheimer Court, Houston, Texas 77056, and its telephone number is (713) 627-5400.

Other Merger Transactions

On August 24, 2018, Enbridge and SEP announced that they entered into the SEP merger agreement on the same day under which Enbridge will acquire all of the outstanding public units of SEP, subject to the approval of the SEP unitholders. Under the terms of the SEP merger agreement, SEP public unitholders will receive 1.111 Enbridge common shares for each outstanding public unit of SEP.

On September 18, 2018, Enbridge and EEQ announced that they entered into the EEQ merger agreement on September 17, 2018 under which Enbridge will acquire all of the outstanding public listed shares of EEQ, subject to the approval of the EEQ shareholders. Under the terms of the EEQ merger agreement, EEQ public shareholders will receive 0.335 of an Enbridge common share for each listed share of EEQ, which is at parity with the exchange ratio in the Merger. The EEQ merger is conditioned upon the consummation of the Merger.

Also on September 18, 2018, Enbridge and ENF announced that they entered into the arrangement agreement. On November 8, 2018, Enbridge and ENF completed the previously announced ENF plan of arrangement pursuant to Section 193 of the Business Corporations Act (Alberta) under which Enbridge acquired all of the issued and outstanding public common shares of ENF. Pursuant to the ENF plan of arrangement, each ENF common share was exchanged for 0.7350 of an Enbridge common share and cash of C$0.45 per ENF common share.

For more information on the Other Merger Transactions, see the section titled “ Where You Can Find More Information ” beginning on page 166.

 

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THE SPECIAL MEETING

EEP is providing this proxy statement/prospectus to the EEP unitholders for the solicitation of proxies to be voted at the special meeting that EEP has called for the purposes described below. This proxy statement/prospectus is first being mailed to EEP unitholders on or about November 13, 2018 and provides EEP unitholders with the information they need to know about the Merger and the proposals to be able to vote or instruct their vote to be cast at the special meeting.

Date, Time and Place

The special meeting will be held on December 17, 2018 at 10:00 a.m., local time, at the Hilton Houston Post Oak by the Galleria, 2001 Post Oak Boulevard, Houston, Texas 77056.

Purpose

At the special meeting, you will be asked to vote solely on the following proposals:

 

   

Proposal  1 : To consider and vote on a proposal to approve the Merger Agreement; and

 

   

Proposal  2 : To consider and vote on a proposal to approve the adjournment of the special meeting from time to time, if necessary to solicit additional proxies if there are not sufficient votes to approve the Merger Agreement at the time of the special meeting.

Special Committee Recommendation

The Special Committee recommends that you vote:

 

   

Proposal 1 : FOR approval of the Merger Agreement.

The GP Delegate Board and the GP Board Recommendation

The GP Delegate Board and the GP Board each recommend that you vote:

 

   

Proposal  1 : FOR approval of the Merger Agreement; and

 

   

Proposal  2 : FOR the adjournment of the special meeting from time to time, if necessary to solicit additional proxies if there are not sufficient votes to approve the Merger Agreement at the time of the special meeting.

The Special Committee, the GP Delegate Board and the GP Board, acting in good faith, unanimously (1)  determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are fair and reasonable to EEP, including the Unaffiliated EEP Unitholders, (2)  approved the Merger Agreement and the transactions contemplated thereby, including the Merger, on the terms and subject to the conditions set forth in the Merger Agreement and (3)  resolved to recommend approval of the Merger Agreement to the EEP unitholders. See the sections titled “ The Merger—Recommendation of the Special Committee ” beginning on page 72, “ The Merger—Recommendation of the GP Delegate ” beginning on page 72, “ The Merger—Recommendation of the GP Board ” beginning on page 72 and “ The Merger—Reasons for the Recommendation of the Special Committee ” beginning on page 72.

In considering the recommendation of the Special Committee, the GP Delegate Board and the GP Board with respect to the Merger Agreement and the transactions contemplated thereby, you should be aware that some of the GP Delegate’s and the General Partner’s directors and executive officers may have interests that are different from, or in addition to, the interests of EEP unitholders more generally. See the section titled “ The Merger—Relationship of the Parties to the Merger Agreement ” beginning on page 96.

 

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Record Date; Outstanding EEP Units; Units Entitled to Vote

The Record Date for the special meeting is November 5, 2018. Only holders of Outstanding EEP units as of the close of business on the Record Date will be entitled to receive notice of, and to vote at, the special meeting or any adjournment or postponement thereof.

As of November 5, 2018, there were 326,517,110 Class A common units, 7.8 million Class B common units, 18.1 million Class E units and 98.6 million i-units of EEP outstanding and that would be entitled to vote at the special meeting. Each holder as of the Record Date of Class A common units, Class B common units, Class E units and i-units of EEP is entitled to one vote for each unit owned. Class F units of EEP have no voting rights and therefore holders of Class F units are not entitled to any votes for their respective Class F units at the special meeting.

A complete list of EEP unitholders entitled to vote at the special meeting will be available for inspection at the principal place of business of EEP during regular business hours for a period of no less than ten days before the special meeting and at the place of the special meeting during the meeting.

Quorum

A quorum of EEP unitholders is required to approve the Merger Agreement at the special meeting, but not to approve any adjournment of the meeting. The presence, in person or by proxy, of EEP unitholders representing 66 2 3 % of the Outstanding EEP units on the Record Date will constitute a quorum for the special meeting. Any abstentions will be counted as present in determining whether a quorum is present at the special meeting.

Required Vote

The approval of the Merger Agreement and the Merger by EEP requires the affirmative vote by, (1) the holders of 66 2 3 % of the Outstanding EEP units, and (2) the holders of a majority of the outstanding Class A common units (other than any Class A common units held by Enbridge and its affiliates) and the outstanding i-units (other than i-units voted at the direction of, Enbridge and its affiliates), voting together as a single class, in each case entitled to vote on such matter at the special meeting or any adjournment or postponement thereof, must vote in favor of approval of the Merger Agreement. Accordingly, an EEP unitholder’s failure to submit a proxy or to vote in person at the special meeting or to abstain from voting, or the failure of an EEP unitholder who holds his or her EEP units in “street name” through a bank, broker, nominee, trust company or other fiduciary to give voting instructions to such bank, broker, nominee, trust company or other fiduciary, will have the same effect as a vote against approval of the Merger Agreement.

Adjournment of the special meeting from time to time by limited partner action, if necessary to solicit additional proxies, if there are not sufficient votes to approve the Merger Agreement at the time of the special meeting, requires (1) if a quorum does not exist, the affirmative vote of the holders of a majority of the Outstanding EEP units represented either in person or by proxy at the special meeting or (2) if a quorum does exist, the affirmative vote of 66 2 3 % of the Outstanding EEP units represented either in person or by proxy at the special meeting. Abstentions will have the same effect as a vote against the proposal to adjourn the special meeting. EEP units not represented in person at the special meeting and for which no proxy has been submitted will have no effect on the outcome of any vote to adjourn the special meeting if a quorum is not present. If a quorum is present, they would have the same effect as a vote against any adjournment proposal.

Unit Ownership of and Voting by Enbridge and the General Partner’s and GP Delegate’s Directors and Executive Officers

As of November 5, 2018, Enbridge and its subsidiaries (other than the GP Delegate) held and were entitled to vote, in the aggregate, Class A common units, Class B common units and Class E units of EEP, and the GP

 

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Delegate’s shares corresponding to i-units of EEP, representing approximately 32.9% of the Outstanding EEP units, and, as of November 5, 2018, the directors and executive officers, and their affiliates, of the General Partner and the GP Delegate held and were entitled to vote, in the aggregate, Class A common units and the GP Delegate’s shares corresponding to i-units of EEP, representing less than 1.0% of the Outstanding EEP units. Enbridge has agreed in the Merger Agreement that, subject to limited exceptions, it and its subsidiaries would vote their respective EEP units and EEQ shares FOR the Merger Agreement proposal, and we believe that Enbridge and its subsidiaries intend to vote their respective EEP units and EEQ shares FOR any adjournment proposal. We believe the General Partner’s and the GP Delegate’s directors and executive officers intend to vote all of their respective EEP units and EEQ shares FOR the Merger Agreement proposal and FOR any adjournment proposal. The GP Delegate will submit the Merger Agreement proposal and any adjournment proposal to a vote of the GP Delegate shareholders to determine how the GP Delegate will vote the EEP i-units at the special meeting.

Voting of Units by Holders of Record

If you are entitled to vote at the special meeting and hold your EEP units in your own name, you can submit a proxy or vote in person by completing a ballot at the special meeting. However, we encourage you to submit a proxy before the special meeting even if you plan to attend the special meeting in order to ensure that your units are voted. A proxy is a legal designation of another person to vote your EEP units on your behalf in the manner you instruct. If you hold EEP units in your own name, you may submit a proxy for your EEP units by:

 

   

calling the toll-free number specified on the enclosed proxy card and following the instructions when prompted;

 

   

accessing the Internet website specified on the enclosed proxy card and following the instructions provided to you; or

 

   

filling out, signing and dating the enclosed proxy card and mailing it in the prepaid envelope included with these proxy materials.

When you submit a proxy by telephone or through the Internet, your proxy is recorded immediately. We encourage you to submit your proxy using these methods whenever possible. If you submit a proxy by telephone or the Internet website, please do not return your proxy card by mail.

All outstanding EEP units represented by each properly executed and valid proxy received before the special meeting will be voted in accordance with the instructions given on the proxy. If an EEP unitholder executes a proxy card without giving instructions, the EEP units represented by that proxy card will be voted FOR approval of the proposal to approve the Merger Agreement and FOR approval of any adjournment proposal.

Your vote is important. Accordingly, please submit your proxy by telephone, through the Internet or by mail, whether or not you plan to attend the meeting in person. Proxies must be received by 11:59 p.m., Eastern Time, on December 16, 2018.

Voting of Units Held in Street Name

If your EEP units are held in an account at a bank, broker, nominee, trust company or other fiduciary, you must instruct the bank, broker, nominee, trust company or other fiduciary on how to vote your EEP units by following the instructions that the bank, broker, nominee, trust company or other fiduciary provides to you with these proxy materials. Most banks, brokers, nominees, trust companies and other fiduciaries offer the ability for unitholders to submit voting instructions by mail by completing a voting instruction card, by telephone and via the Internet.

If you hold your EEP units in a brokerage account and you do not provide voting instructions to your broker, your EEP units will not be voted on any proposal, as under the current rules of the NYSE, brokers do not

 

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have discretionary authority to vote on the proposal to approve the Merger Agreement or any adjournment proposal. Since there are no items on the agenda which your broker has discretionary authority to vote upon, there will be no broker non-votes present at the special meeting.

If you hold EEP units through a bank, broker, nominee, trust company or other fiduciary and wish to vote your EEP units in person at the special meeting, you must obtain a legal proxy from your bank, broker, nominee, trust company or other fiduciary and present it to the inspector with your ballot when you vote at the special meeting.

Revocability of Proxies; Changing Your Vote

You may revoke your proxy and/or change your vote at any time before your proxy is voted at the special meeting. If you are an EEP unitholder of record, you can do this by:

 

   

sending a written notice stating that you revoke your proxy bearing a date later than the date of the proxy to EEP at 5400 Westheimer Court, Houston, Texas 77056, Attn: Corporate Secretary;

 

   

submitting a valid, later-dated proxy by mail, telephone or Internet; or

 

   

attending the special meeting and voting by ballot in person (your attendance at the special meeting will not, by itself, revoke any proxy that you have previously given).

If you choose to revoke your proxy by written notice or submit a later-dated proxy, you must do so by 11:59 p.m., Eastern Time, on the day before the special meeting.

If you hold your EEP units through a bank, broker, nominee, trust company or other fiduciary, you must follow the directions you receive from your bank, broker, nominee, trust company or other fiduciary, in order to revoke or change your vote.

Solicitation of Proxies

EEP will bear all costs and expenses in connection with the solicitation of proxies from its unitholders, except that Enbridge has agreed to pay all expenses of printing and mailing this proxy statement/prospectus and all filing fees payable to the SEC in connection with this proxy statement/prospectus. In addition to the solicitation of proxies by mail, EEP will request that banks, brokers and other record holders send proxies and proxy material to the beneficial owners of EEP units and secure their voting instructions, if necessary. EEP will reimburse the banks, brokers and other record holders for their reasonable expenses in taking those actions. EEP has also made arrangements with D.F. King & Co., Inc. to assist in soliciting proxies and in communicating with EEP unitholders and estimates that it will pay them a fee of approximately US$15,000, plus fees on a per call basis and reasonable out-of-pocket fees and expenses for these services.

EEP Unitholders should not send unit certificates with their proxies. A letter of transmittal and instructions for the surrender of the EEP unit certificates will be mailed to EEP Unitholders shortly after the completion of the Merger.

Householding

The SEC has adopted a rule concerning the delivery of annual reports and proxy statements. It permits EEP, with your permission, to send a single notice of meeting and, to the extent requested, a single set of this proxy statement/prospectus to any household at which two or more unitholders reside if EEP believes they are members of the same family. This rule is called “householding”, and its purpose is to help reduce printing and mailing costs of proxy materials.

A number of brokerage firms have instituted householding. If you and members of your household have multiple accounts holding EEP units, you may have received a householding notification from your broker.

 

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Please contact your broker directly if you have questions, require additional copies of this proxy statement/prospectus or wish to revoke your decision to household. These options are available to you at any time.

Adjournments

Adjournments may be made from time to time for the purpose of, among other things, soliciting additional proxies. Adjournment of the special meeting by EEP limited partner action requires (1) if a quorum does not exist, the affirmative vote of the holders of a majority of the Outstanding EEP units represented either in person or by proxy at the special meeting or (2) if a quorum does exist, the affirmative vote of 66 2 3 % of the outstanding EEP units represented in person or by proxy at the special meeting. EEP is not required to notify EEP unitholders of any adjournment of 45 days or less if the time and place of the adjourned meeting are announced at the meeting at which the adjournment is taken, unless after the adjournment a new record date is fixed for the adjourned meeting. At any adjourned meeting, EEP may transact any business that it might have transacted at the original meeting, provided that a quorum is present at such adjourned meeting. References to the special meeting in this proxy statement/prospectus are to such special meeting as adjourned or postponed.

Attending the Special Meeting

All holders of outstanding EEP units as of the close of business on the record date, or their duly appointed proxies, may attend the special meeting. Seating, however, is limited. Admission to the special meeting will be on a first-come, first-served basis. Registration will begin at 9:00 a.m., local time, and seating will begin at 9:30 a.m., local time. Cameras, recording devices and other electronic devices will not be permitted at the special meeting.

Unitholders will be asked to present valid picture identification, such as a driver’s license or passport. Please note that if you hold your EEP units in street name, you will also need to bring a copy of the voting instruction card that you receive from your bank, broker, nominee, trust company or other fiduciary in connection with the special meeting or a brokerage statement reflecting your EEP unit ownership as of the close of business on the record date and check in at the registration desk at the special meeting.

Assistance

If you need assistance in completing your proxy card, have questions regarding the special meeting, or would like additional copies, without charge, of this proxy statement/prospectus, please contact D.F. King & Co., Inc. toll-free at (800) 549-6746 (banks and brokers call collect at (212) 269-5550) or by email at Enbridge@dfking.com.

 

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PROPOSAL 1: THE MERGER PROPOSAL

EEP Unitholders are being asked to approve the Merger Agreement. Approval of the Merger Agreement and the Merger is a condition to the closing of the Merger. If the Merger Agreement is not approved, the Merger will not occur. For a detailed discussion of the Merger and the Merger Agreement, see the sections titled “ The Merger ” beginning on page 52 and “ The Merger Agreement ” beginning on page 100.

Required Vote

The approval of the Merger Agreement and the Merger by EEP requires the affirmative vote by (1) the holders of at least 66 2 3 % of the Outstanding EEP units, and (2) the holders of a majority of the outstanding Class A common units (other than any Class A common units held by Enbridge and its affiliates) and the outstanding i-units (other than i-units voted at the direction of Enbridge and its affiliates), voting together as a single class, in each case entitled to vote on such matter at the special meeting or any adjournment or postponement thereof.

Vote Recommendation

The Special Committee, the GP Delegate Board and the GP Board recommend that EEP Unitholders vote “FOR” the approval of the Merger Agreement and the Merger.

 

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PROPOSAL 2: THE ADJOURNMENT PROPOSAL

EEP Unitholders are being asked to approve the adjournment of the special meeting from time to time, if necessary or appropriate, to solicit additional proxies in favor of the proposal to approve the Merger Agreement, if there are insufficient votes at the time of such adjournment to approve such proposal. If, at the special meeting, the number of Class A common units present or represented and voting in favor of the approval of the Merger Agreement is insufficient to approve the corresponding proposal, the General Partner may move to adjourn the special meeting from time to time for the purpose of soliciting additional proxies for approval of such proposals.

Required Vote

If submitted to a vote of EEP Unitholders, approval of an adjournment of the special meeting from time to time to solicit additional proxies, if there are not sufficient votes to approve the Merger Agreement at the time of the special meeting, requires (1) if a quorum does not exist, the affirmative vote of the holders of a majority of the Outstanding EEP units represented either in person or by proxy at the special meeting or (2) if a quorum does exist, the affirmative vote of 66 2 3 % of the Outstanding EEP units represented either in person or by proxy at the special meeting.

Vote Recommendation

The GP Delegate Board and the GP Board recommend that EEP Unitholders vote “FOR” the approval of the Adjournment Proposal.

 

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THE MERGER

This discussion of the Merger is qualified in its entirety by reference to the Merger Agreement, which is attached to this proxy statement/prospectus as Annex  A and incorporated by reference herein in its entirety. You should read the entire Merger Agreement carefully as it is the legal document that governs the Merger.

Transaction Structure

The Merger Agreement provides that, upon the terms and conditions in the Merger Agreement, and in accordance with the EEP Partnership Agreement, the Delaware Limited Liability Company Act (“DLLCA”) and the DRULPA, at the Effective Time of the Merger, Merger Sub will be merged with and into EEP, with EEP being the surviving entity of the Merger and a wholly owned subsidiary of Enbridge.

Merger Consideration

At the Effective Time, by virtue of the merger and without any action on the part of the parties or any holder of EEP partnership interests, each Class A common unit issued and outstanding immediately prior to the Effective Time (other than the Excluded Units) will be converted into the right to receive Enbridge common shares in exchange for such holder’s Class A common units at the Exchange Ratio.

If the Exchange Ratio would result in an EEP unitholder being entitled to receive, after aggregating all fractional units which such holder would otherwise be entitled to receive in connection with the Merger and rounding to three decimal places, a fraction of an Enbridge common share, such holder will receive a cash payment (without interest, rounded down to the nearest cent) in lieu of such fractional Enbridge common share in an amount equal to the product obtained by multiplying (1) the amount of the fractional share interest in an Enbridge common share to which such holder would be entitled and (2) an amount equal to the average of the volume-weighted average price per share of Enbridge common shares on the NYSE (as reported by Bloomberg L.P., or, if not reported therein, in another authoritative source mutually selected by Enbridge and EEP) on the trading day immediately prior to the Effective Time for ten trading days ending on the fifth full business day immediately prior to the Closing Date.

Background of the Merger

The Enbridge Board and senior management of Enbridge, with the assistance of Enbridge’s financial and legal advisors, from time to time review and consider various potential strategic opportunities and alternatives in light of industry, regulatory and economic trends and developments. As part of such review, Enbridge has evaluated potential transactions, including various transactions with respect to its sponsored vehicles, to advance its strategic objective of streamlining Enbridge’s business to create value for Enbridge’s and its sponsored vehicles’ security holders.

On September 6, 2016, Enbridge and Spectra Energy announced that they had entered into a definitive merger agreement under which Enbridge and Spectra Energy would combine in a stock-for-stock merger transaction. In connection therewith, Enbridge began to conduct an internal review with the objective of improving EEP’s financial position and future outlook.

On January 27, 2017, in connection with their quarterly business updates, Enbridge and EEP announced that the strategic review of EEP was ongoing, and EEP was considering (a) the sustainability of EEP’s current level of distributions to unitholders, (b) further cost efficiency measures, (c) the potential extension of existing supportive actions by Enbridge with respect to EEP, (d) the sale of a portion or all of its remaining interests in the natural gas gathering and processing assets, including to Enbridge, and (e) potential further restructuring of the general partner incentive distribution rights.

On February 27, 2017, Enbridge and Spectra Energy completed their previously announced combination.

 

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On April 28, 2017, EEP announced that its strategic review had concluded, and it had taken several actions to strengthen EEP’s financial position and outlook, including modifying EEP’s capital structure, including its incentive distribution mechanism, and reducing quarterly distributions from US$0.583 per unit to US$0.350 per unit.

Following the conclusion of the strategic review of EEP, Enbridge continued throughout 2017 to evaluate and consider various potential strategic opportunities and alternatives, including with respect to EEP and its other sponsored vehicles.

On November 2, 2017, Enbridge filed with the SEC Amendment No. 4 to the Schedule 13D, filed by Enbridge and certain of its affiliates with the SEC on December 4, 2008 with respect to its investment in EEP (the “EEP Schedule 13D”). Enbridge disclosed in Amendment No. 4 to the EEP Schedule 13D that, as part of its ongoing evaluation of its investment in EEP, and alternatives to that investment, including a potential consolidation, acquisition or sale of assets or EEP units, or changes to EEP’s capital structure, Enbridge may, from time to time, formulate plans or proposals with respect to such matters and hold discussions with or make formal proposals to the GP Delegate Board, in its capacity as the board of directors of the delegate of the General Partner, other holders of EEP units or other third parties regarding such matters. Also on November 2, 2017, Enbridge filed with the SEC Amendment No. 2 to the Schedule 13D, filed by Enbridge and certain of its affiliates with the SEC on October 28, 2002 with respect to its investment in EEQ (the “EEQ Schedule 13D”). Enbridge disclosed in Amendment No. 2 to the EEQ Schedule 13D that, as part of its ongoing evaluation of its investment in EEQ, and alternatives to that investment, including a potential consolidation, acquisition or sale of assets or listed shares of EEQ, or changes to EEQ’s capital structure, Enbridge may, from time to time, formulate plans or proposals with respect to such matters and hold discussions with or make formal proposals to the GP Delegate Board, in its capacity as the board of directors of EEQ, other holders of listed shares of EEQ or other third parties regarding such matters.

On November 29, 2017, Enbridge announced the finalization of its strategic plan and financial outlook for 2018 through 2020, including Enbridge’s key objectives of growing organically, minimizing risk and streamlining Enbridge’s business.

On December 22, 2017, the United States implemented U.S. tax reform. The Tax Cuts and Jobs Act (“TCJA”) was signed into law and became enacted for tax purposes. Substantially all of the provisions of the TCJA are effective for taxation years beginning after December 31, 2017. The most significant change included in the TCJA was a reduction in the corporate federal income tax rate from 35% to 21%. This tax rate change caused EEP to reduce the income tax allowance component of the tolls in its Federal Energy Regulatory Commission (the “FERC”) regulated cost-of-service based Facility Surcharge Mechanism projects.

On February 15, 2018, EEP announced in connection with its quarterly business update that the total annual impact to EEP of U.S. tax reform was expected to be a US$55 million per year reduction to distributable cash flow, net of noncontrolling interests.

On March 15, 2018, the FERC revised a long-standing policy, announcing in a revised policy statement that it would no longer permit entities organized as master limited partnerships (“MLPs”) to recover an income tax allowance for interstate pipeline assets with cost-of-service rates. The FERC also, among other things, issued a notice seeking comment on how the FERC should address changes related to accumulated deferred income taxes (“ADIT”) (collectively, with the revised policy statement, the “March FERC Announcement”). The trading price of Enbridge’s, EEP’s and EEQ’s publicly-traded securities reacted negatively to the March FERC Announcement, including (a) Enbridge common shares closing 4.9% lower the day of the March FERC Announcement and 4.8% lower three weeks after the day of the March FERC Announcement, (b) the Class A common units closing 17.3% lower the day of the March FERC Announcement and 23.7% lower three weeks after the day of the March FERC Announcement and (c) the listed shares of EEQ closing 15.6% lower the day of the March FERC Announcement and 23.2% lower three weeks after the day of the March FERC Announcement, in each case, compared to their respective closing prices on the NYSE on the trading day immediately preceding the date of the March FERC Announcement.

 

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On March 16, 2018, Enbridge announced that it was continuing to assess options to mitigate the effects of the March FERC Announcement on Enbridge’s sponsored vehicles, including through the acquisition of all of Enbridge’s sponsored vehicles by Enbridge, but that Enbridge did not expect a material impact to its previously disclosed 2018-2020 consolidated financial guidance as a result of the March FERC Announcement.

Also on March 16, 2018, EEP announced that, based on its preliminary assessment of the March FERC Announcement, the financial impact to EEP for 2018 was expected to be an approximate US$100 million reduction in revenues and US$60 million reduction to distributable cash flow, net of noncontrolling interests.

On April 24, 2018, the Enbridge Board held a telephonic meeting to discuss the financial effects of the March FERC Announcement on Enbridge, its sponsored vehicles, and the MLP market more broadly, as well as options with respect to minimizing those effects. Enbridge management highlighted the negative impact of the March FERC Announcement and the decline in the effectiveness of the MLP business model and recommended acceleration of Enbridge’s review of a potential corporate simplification.

Throughout April and May 2018, Enbridge management also developed updated projections for its sponsored vehicles, including extended five-year projections through 2022, in light of the March FERC Announcement and in connection with Enbridge’s review of a potential corporate simplification.

On May 9, 2018, in connection with its quarterly business update, EEP announced that the financial impact to EEP for 2018 from the combination of U.S. tax reform and the March FERC Announcement was expected to be a US$125 million reduction to distributable cash flow, net of noncontrolling interests, and exclusive of a payback of ADIT, and that EEP was continuing to evaluate options to mitigate the negative impact of the March FERC Announcement as previously announced.

On May 10, 2018, Enbridge released its quarterly report for the quarter ended March 31, 2018, which stated, among other things, that the March FERC Announcement was adversely affecting MLPs generally, including EEP, due to both the direct consequences of the changes in FERC policy and the possible negative impact on the longer-term availability of capital on attractive terms to EEP.

On May 16, 2018, the Enbridge Board held a telephonic meeting, which was also attended by representatives of Merrill Lynch, Pierce, Fenner & Smith Incorporated (“BofAML”) and Scotia Capital Inc., financial advisors to Enbridge, and Sullivan & Cromwell LLP (“S&C”) and McCarthy Tétrault LLP, legal advisors to Enbridge, to discuss Enbridge management’s conclusions and recommendations following completion of their review of a potential corporate simplification. Enbridge management noted that the unit and share prices of Enbridge’s sponsored vehicles, including EEP, weakened significantly following the March FERC Announcement, making them an ineffective source of capital for Enbridge, relative to alternative equity sources. Enbridge management also discussed potential alternatives to a buy-in of all of Enbridge’s sponsored vehicles, including maintaining Enbridge’s existing corporate structure or converting the sponsored vehicles into C-corporations for tax purposes but maintaining them as public vehicles. Following a discussion by the Enbridge Board of the potential risks and benefits of a buy-in of Enbridge’s sponsored vehicles and the viability of various alternatives, the Enbridge Board authorized Enbridge management to make an offer to each of its sponsored vehicles to acquire the outstanding public equity securities of the sponsored vehicles through separate combination transactions.

On May 17, 2018, representatives of Enbridge delivered a proposal (the “EEP Initial Proposal”) to the GP Delegate Board, in its capacity as the board of directors of the delegate of the General Partner, to acquire all of the outstanding Class A common units not already owned by Enbridge and its affiliates through a merger between EEP and Merger Sub, at an exchange ratio of 0.3083 Enbridge common shares for each issued and outstanding publicly held Class A common unit. On the same day, representatives of Enbridge delivered a separate proposal (the “EEQ Initial Proposal”) to the GP Delegate Board, in its capacity as the board of directors of EEQ, to acquire all of the outstanding listed shares of EEQ not already owned by Enbridge and its affiliates

 

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through a merger between EEQ and Winter Acquisition Sub I, Inc., at an exchange ratio of 0.2887 Enbridge common shares for each issued and outstanding publicly held listed share of EEQ. Also on the same day, representatives of Enbridge delivered proposals to each of SEP and ENF to acquire the outstanding publicly-traded equity securities of those sponsored vehicles, at exchange ratios of (a) 1.0123 Enbridge common shares for each issued and outstanding publicly held common unit of SEP, and (b) 0.7029 Enbridge common shares for each issued and outstanding publicly held common share of ENF.

On May 17, 2018, immediately following the delivery of the EEP Initial Proposal, EEQ Initial Proposal and the proposals with respect to SEP and ENF, Enbridge publicly announced that it had made such proposals and that Enbridge believed that both the direct consequences of the March FERC Announcement, as well as the adverse market effects following such announcement, weakened EEP and EEQ’s credit profile and made them ineffective and unreliable standalone financing vehicles to support Enbridge’s growth. Enbridge further announced that it believed that, on a standalone basis, EEP would face the cessation of distribution growth and potential reductions in cash distribution to unitholders as early as 2019. On the same day, Enbridge also amended its Schedule 13Ds with respect to its investments in SEP, EEP and EEQ.

On May 17, 2018, the GP Delegate Board held a telephonic meeting to discuss the offer received from Enbridge. Following that discussion, the GP Delegate Board, in its capacity as the board of directors of the delegate of the General Partner, formally constituted the Special Committee and appointed Messrs. Connelly (Chair), Waldheim and Westbrook to serve on the Special Committee. The GP Delegate Board, in its capacity as the board of directors of the delegate of the General Partner, authorized the Special Committee to (a) review, evaluate, consider and negotiate the proposed acquisition by Enbridge, through a wholly owned subsidiary, of all of the Class A common units that are not already owned by Enbridge and its affiliates (including the amount and form of consideration to be paid in connection therewith), (b) consider alternatives to such proposed transaction, if any, (c) approve or disapprove, as the case may be, such proposed transaction and the agreements related thereto, (d) make such recommendations to the GP Delegate Board as it deems appropriate, including whether or not the GP Delegate Board should approve such proposed transaction and the agreements related thereto, (e) make all determinations and take all actions with respect to such proposed transaction and the agreements related thereto as may be authorized and contemplated thereby, and (f) do all things that may, in the judgment of the Special Committee, be deemed necessary, appropriate or advisable to assist the GP Delegate Board in carrying out its responsibilities with respect to such proposed transaction.

Also on May 17, 2018, the GP Delegate Board, in its capacity as the board of directors of EEQ, also formally constituted a special committee of the board of directors of EEQ (the “EEQ Special Committee” and together with the Special Committee, the “EEP/EEQ Special Committees”) and appointed Messrs. Connelly (Chair), Waldheim and Westbrook to the EEQ Special Committee. The GP Delegate Board, in its capacity as the board of directors of EEQ, authorized the EEQ Special Committee to (a) review, evaluate, consider and negotiate the proposed acquisition by Enbridge, through a wholly owned subsidiary, of all of the listed shares of EEQ that are not already owned by Enbridge and its affiliates (including the amount and form of consideration to be paid in connection therewith), (b) consider alternatives to such proposed transaction, if any, (c) approve or disapprove, as the case may be, such proposed transaction and the agreements related thereto, (d) make such recommendations to the GP Delegate Board as it deems appropriate, including whether or not the GP Delegate Board should approve such proposed transaction, (e) make all determinations and take all actions with respect to such proposed transaction and the agreements related thereto as may be authorized and contemplated thereby, and (f) do all things that may, in the judgment of the EEQ Special Committee, be deemed necessary, appropriate or advisable to assist the GP Delegate Board in carrying out its responsibilities with respect to such proposed transaction. In establishing the EEP/EEQ Special Committees, the GP Delegate Board considered, among other things, that Mr. Connelly’s son was employed by Midcoast Operating, L.P. (“Midcoast”), which at the time was a subsidiary of Enbridge. Enbridge had previously announced on May 9, 2018, that it had entered into a definitive agreement to sell Midcoast and its subsidiaries, and such transaction was completed on August 1, 2018. The GP Delegate Board also took into consideration that Messrs. Connelly and Westbrook had previously served on the

 

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special committee of the GP Delegate Board that reviewed and recommended the 2015 Transaction (the “2015 Special Committee”) and are named as defendants in the Derivative Action.

Throughout the process of considering the EEP Initial Proposal and the EEQ Initial Proposal, EEP and EEQ received communications from their respective unitholders and shareholders, which communications were provided to the EEP/EEQ Special Committees and their legal and respective financial advisors and considered by the EEP/EEQ Special Committees as part of the review process.

On May 17, 2018, Mr. Connelly contacted representatives of Bracewell regarding the potential engagement of Bracewell as legal advisor to the EEP/EEQ Special Committees. In connection with engaging Bracewell, the EEP/EEQ Special Committees considered, among other things, that Bracewell served as legal counsel to the 2015 Special Committee. An engagement letter dated May 17, 2018, detailing the terms of Bracewell’s engagement as legal advisor to the Special Committee, was subsequently executed and an engagement letter dated May 17, 2018, detailing the terms of Bracewell’s engagement as legal advisor to the EEQ Special Committee, was subsequently executed.

Between May 17, 2018 and May 31, 2018, the EEP/EEQ Special Committees and Bracewell held discussions concerning whether the Special Committee and the EEQ Special Committee should retain a single financial advisor for both committees or separate financial advisors for each committee. The EEP/EEQ Special Committees determined to retain separate financial advisors for each committee. On May 17, 2018, Mr. Connelly and representatives of Evercore discussed the potential engagement of Evercore as financial advisor to the Special Committee. On May 17, 2018, Mr. Waldheim and representatives of Goldman Sachs discussed the potential engagement of Goldman Sachs as financial advisor to the EEQ Special Committee. Mr. Connelly also contacted representatives of a second investment bank regarding the potential engagement of such investment bank as financial advisor to the EEQ Special Committee.

On May 18, 2018, EEP and EEQ each issued a press release announcing the receipt of the EEP Initial Proposal and EEQ Initial Proposal, respectively, from Enbridge, and that the GP Delegate Board had established the EEP/EEQ Special Committees to review and consider such proposals.

On May 31, 2018, the Special Committee held a meeting in person at the offices of Bracewell in Houston, Texas, with representatives of Bracewell and Evercore. Representatives of Bracewell provided an overview of the proposed Merger and the legal framework that governs the Special Committee’s review, and representatives of Evercore provided an overview of the proposed Merger structure, process and timing. On June 4, 2018, Evercore delivered a disclosure letter regarding its relationships with Enbridge and its affiliates to the Special Committee and Bracewell. An engagement letter dated June 4, 2018, detailing the terms of Evercore’s engagement, was subsequently executed.

Also on May 31, 2018, the EEQ Special Committee held a meeting in person at the offices of Bracewell in Houston, Texas, with representatives of Bracewell. At such meeting, the EEQ Special Committee conducted interviews with two investment banks regarding their potential service as financial advisor to the EEQ Special Committee. Following such interviews, the EEQ Special Committee determined to retain Goldman Sachs as financial advisor to the EEQ Special Committee. On June 5, 2018, Goldman Sachs delivered an executed disclosure letter regarding certain of its relationships with Enbridge, EEP, ENF and SEP to the EEQ Special Committee and Bracewell. An engagement letter dated June 18, 2018, detailing the terms of Goldman Sachs’ engagement, was subsequently executed.

On June 3, 2018, the directors of the GP Delegate Board, in its capacity as the board of directors of the delegate of the General Partner, determined that (a) each member of the Special Committee would receive a special retainer fee of US$40,000, plus US$1,500 for each related meeting of the Special Committee (or subcommittee thereof) and an additional US$1,500 for any required travel to Houston, Texas for an in-person meeting, and (b) the Chair of the Special Committee would receive an additional retainer fee of US$40,000. In

 

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the event that the Merger is consummated, each member of the Special Committee would receive an additional hourly fee of US$500 for any time spent in connection with any litigation arising out of their service on the Special Committee. Also on June 3, 2018, the directors of the GP Delegate Board, in its capacity as the board of directors of EEQ, determined that (a) each member of the EEQ Special Committee (or subcommittee thereof) would receive a special retainer fee of US$40,000, plus US$1,500 for each related meeting of the EEQ Special Committee and an additional US$1,500 for any required travel to Houston, Texas for an in-person meeting, and (b) the Chair of the EEQ Special Committee would receive an additional retainer fee of US$40,000. In the event that the EEQ Merger is consummated, each member of the EEQ Special Committee would receive an additional hourly fee of US$500 for any time spent in connection with any litigation arising out of their service on the EEQ Special Committee.

On June 4, 2018, representatives of Bracewell held discussions with representatives of Friedlander & Gorris, P.A. (“Friedlander & Gorris”), counsel to the plaintiffs in the Derivative Action, concerning a possible meeting with the EEP/EEQ Special Committees and plaintiff’s counsel in the Derivative Action.

On June 5, 2018, members of Enbridge management, along with representatives of BofAML, S&C and Enbridge’s tax advisors, conducted an in-person presentation to the EEP/EEQ Special Committees at a joint meeting thereof, held at the offices of Enbridge in Houston, Texas. Representatives of Bracewell, Evercore and Goldman Sachs also were present during the meeting. During the meeting, representatives of Enbridge management explained to the EEP/EEQ Special Committees and their respective advisors the background to and strategic rationale for the proposed Merger, including, among other things, the decreasing fund flows and equity capital available to MLPs, industry trending toward simplification transactions and streamlined structures and the increasing focus on “self-funding” business models, the proposed EEQ Merger and the Other Merger Transactions, and Enbridge management’s five-year projections for Enbridge on a standalone basis and pro forma, taking into account the proposed Merger, the proposed EEQ Merger and the Other Merger Transactions, and standalone projections for EEP.

Also on June 5, 2018, after completion of the presentation from Enbridge management, the members of the EEP/EEQ Special Committees held a joint meeting with their respective advisors, including representatives of Bracewell, Evercore and Goldman Sachs, to discuss their initial impressions of the EEP Initial Proposal and the EEQ Initial Proposal and the process for evaluating the transactions. Also at the meeting, representatives of Bracewell advised the EEP/EEQ Special Committees that Friedlander & Gorris had requested a meeting with the EEP/EEQ Special Committees concerning the Derivative Action. Also at the meeting, each of the Special Committee and the EEQ Special Committee determined to engage MNAT as special Delaware counsel to assist with its review of the EEP Initial Proposal and the EEQ Initial Proposal, respectively. In connection with engaging MNAT, the EEP/EEQ Special Committees considered, among other things, that MNAT is serving as legal counsel to certain defendants in the Derivative Action, including Messrs. Connelly and Westbrook. An engagement letter dated June 25, 2018, detailing the terms of MNAT’s engagement as legal advisor to the Special Committee, was subsequently executed, and an engagement letter dated June 25, 2018, detailing the terms of MNAT’s engagement as legal advisor to the EEQ Special Committee, was subsequently executed.

On June 12, 2018, the EEP/EEQ Special Committees held a joint telephonic meeting with representatives of Bracewell and MNAT. During the meeting, the EEP/EEQ Special Committees discussed and considered the current structure of the two committees and their respective advisors. They considered, in particular, whether the two committees should be comprised of different individuals and whether the two committees should have separate and non-overlapping legal and financial advisors. Representatives of Bracewell and MNAT provided an overview of the provisions in the EEP Partnership Agreement and the Limited Liability Company Agreement of EEQ relating to the EEP/EEQ Special Committees’ respective roles in reviewing the transactions, and the many considerations relating to the structure of the two committees including, among other considerations, that (a) the proposed Merger and the proposed EEQ Merger would be negotiated simultaneously but that EEP and EEQ were each negotiating with Enbridge and not with one another, (b) the proposed EEQ Merger was conditioned upon the consummation of the proposed Merger, (c) the standards governing the approval of related-party transactions

 

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are substantially the same for both EEP and EEQ, and that each of the EEP Partnership Agreement and the EEQ LLC Agreement provide that the fair and reasonable nature of a transaction shall be considered in the context of all similar or related transactions and (4) Messrs. Connelly, Waldheim and Westbrook owned Class A common units and did not own listed shares of EEQ. Also during the meeting, the EEP/EEQ Special Committees, together with their legal advisors, discussed certain challenges and considerations in evaluating the proposed Merger and the proposed EEQ Merger, respectively, including, among other things, the taxable nature of the proposed Merger to EEP unitholders, combined with the fact that the merger consideration consisted of Enbridge common shares, and the fact that the U.S. federal tax consequences of the proposed Merger would vary among EEP unitholders depending upon, among other things, the EEP unitholders’ individual tax characteristics and how long they had owned the Class A common units. During the meeting and in light of the factors discussed with Bracewell and MNAT, Messrs. Connelly, Waldheim and Westbrook determined that each of the Special Committee and the EEQ Special Committee would continue to be comprised of the same persons and be represented by a single set of legal advisors and separate financial advisors, as was currently the arrangement.

On June 13, 2018, representatives of Bracewell and MNAT held discussions with representatives of Friedlander & Gorris concerning a possible meeting with the EEP/EEQ Special Committees and plaintiff’s counsel in the Derivative Action.

On June 13, 2018, Enbridge opened an electronic data room to provide materials responsive to due diligence requests made by the EEP/EEQ Special Committees and their legal and respective financial advisors. From June 13, 2018, until the execution of the Merger Agreement and the EEQ Merger Agreement, the EEP/EEQ Special Committees and their respective advisors conducted due diligence on Enbridge, EEP and EEQ, including through the review of materials made available in the data room and conference calls between representatives of the EEP/EEQ Special Committees and their respective advisors and representatives of Enbridge.

During the week of June 18, 2018, representatives of the EEP/EEQ Special Committees provided Enbridge initial due diligence requests with respect to certain legal and financial information of Enbridge.

On June 27, 2018, the Special Committee held a telephonic meeting with representatives of Bracewell and Evercore. During the meeting, representatives of Evercore presented a preliminary analysis to the Special Committee of the financial terms of the proposed Merger based on the financial projections received from EEP and Enbridge management (the “Management Projections”). Also during the meeting, representatives of Bracewell provided the Special Committee with an overview of communications received from EEP unitholders and EEQ shareholders and a summary of the March FERC Announcement.

On June 28, 2018, the Minnesota Public Utilities Commission approved the issuance of a Certificate of Need and pipeline route for construction of Enbridge’s United States Line 3 Replacement Program in Minnesota (the “Line 3 Approval”). The Enbridge common shares closed 4.5% percent higher the day of the Line 3 Approval and 10.8% percent higher one week after the day of the Line 3 Approval, the Class A common units closed 3.7% higher the day of the Line 3 Approval and 8.6% higher one week after the day of the Line 3 Approval, and the listed shares of EEQ closed 2.5% higher the day of the Line 3 Approval and 8.9% higher one week after the day of the Line 3 Approval, in each case, compared to their respective closing prices on the NYSE on the trading day immediately preceding the date of the Line 3 Approval.

On June 28, 2018, the EEQ Special Committee held a telephonic meeting with representatives of Bracewell, MNAT and Goldman Sachs. During the meeting, representatives of Goldman Sachs discussed with the EEQ Special Committee Goldman Sachs’ preliminary, illustrative financial analysis of the proposed EEQ Merger. At the end of the meeting, after discussing Goldman Sachs’ presentation, the EEQ Special Committee engaged its advisors in a discussion of negotiating strategy including, among other things, whether to value the listed shares of EEQ and the Class A common units at parity for purposes of negotiation and whether to submit a joint responsive proposal to Enbridge for both the proposed EEQ Merger and the proposed Merger instead of separate responsive proposals, and the committee agreed to defer consideration of any potential counterproposal until

 

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after Goldman Sachs had received certain additional financial and other information from EEP and Enbridge and until after such time as the EEQ Special Committee had the opportunity to further consider the Derivative Action. Also during the meeting, representatives of Bracewell provided an overview of legal considerations relating to the proposed EEQ Merger, including, among other things, issues relating to the March FERC Announcement and a summary of purchase rights held by Enbridge and certain of its affiliates under the Limited Liability Company Agreement of EEQ and its legal advisors’ views on whether any of those purchase rights were implicated by the proposed EEQ Merger or the proposed Merger.

On July 6, 2018, representatives of S&C provided representatives of Bracewell with (a) an initial draft of the Merger Agreement and (b) an initial draft of the EEQ Merger Agreement. The key economic terms of the initial draft merger agreements were consistent with the EEP Initial Proposal and the EEQ Initial Proposal, respectively.

On July 10, 2018, the EEQ Special Committee held a telephonic meeting with representatives of Bracewell, MNAT and Goldman Sachs. During the meeting, representatives of Goldman Sachs discussed with the EEQ Special Committee Goldman Sachs’ preliminary, illustrative financial analysis of the proposed EEQ Merger.

On July 11, 2018, the Special Committee held a telephonic meeting with representatives of Bracewell, MNAT and Evercore. During the meeting, representatives of Evercore presented the Special Committee with a preliminary analysis of the financial terms of the proposed Merger. The Special Committee also discussed the fact that representatives of BofAML had advised Evercore prior to the meeting that Enbridge was unwilling to convert EEP into a C-corporation for tax purposes. Following the presentation, the Special Committee and its advisors engaged in a discussion regarding Evercore’s presentation and the Special Committee’s strategy for developing a potential responsive proposal to Enbridge including, among other things, whether to value the Class A common units and the listed shares of EEQ at parity for purposes of negotiation and whether to submit a joint responsive proposal for each of the proposed EEQ Merger and the proposed Merger, and the committee determined to prepare a joint responsive proposal to Enbridge in respect of both the proposed Merger and the proposed EEQ Merger and agreed to defer consideration of any potential counter proposal until after its advisors could complete additional diligence and until after such time as the Special Committee had the opportunity to further consider the Derivative Action. The Special Committee further determined to convene a joint meeting of the EEP/EEQ Special Committees and their respective advisors once the additional diligence had been completed. Also during the meeting, representatives of Bracewell provided an analysis of the potential U.S. federal tax impact of the proposed Merger utilizing information obtained from Enbridge management. Following discussion, the Special Committee directed Evercore to request additional financial information with respect to tax matters from Enbridge management.

On July 13, 2018, the EEP/EEQ Special Committees held a joint meeting in person at the offices of Bracewell in Houston, Texas, with representatives of Bracewell, Evercore and Goldman Sachs. The purpose of the meeting was to evaluate information relating to the Derivative Action. The Special Committee, the EEQ Special Committee, Bracewell, Evercore and Goldman Sachs were joined by representatives of the following organizations at different times and in separate meetings: (a) Brager, Eagel & Squire P.C. and Friedlander & Gorris, counsel to the plaintiffs in the Derivative Action, and (b) Paul Hastings LLP and MNAT (telephonically), counsel to certain defendants in the Derivative Action, including Messrs. Connelly and Westbrook. The EEP/EEQ Special Committees had requested the representatives’ views on the Derivative Action in order to review, evaluate and consider the Derivative Action and to determine the value in connection with its review of the proposed Merger and the proposed EEQ Merger, respectively. During the meeting with representatives of Brager, Eagel & Squire P.C. and Friedlander & Gorris, the representatives shared and discussed their views on the Derivative Action and estimated that damages in the Derivative Action were US$743.8 million plus interest of approximately US$186.0 million. Representatives of Brager, Eagel & Squire P.C. and Friedlander & Gorris also advised the EEP/EEQ Special Committees that they would be open to engaging in a mediation process with Enbridge with the objective of settling the Derivative Action. During the meeting with representatives of Paul Hastings LLP and MNAT, the representatives of Paul Hastings LLP shared and discussed its views on the Derivative Action.

 

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On July 13, 2018, the Derivative Action Plaintiff filed the Fourth Amended Complaint with respect to the Derivative Action with the Delaware Chancery Court, bringing derivative claims on behalf of EEP against the General Partner and EEQ, and bringing direct claims on behalf of the unitholders of EEP against the General Partner and Enbridge (the “Direct Claims”), among others, and alleging total damages in “an amount exceeding US$500 million” based in part upon the impact on such EEP unitholders of the special tax allocation which had been approved as part of the 2015 Transaction. The Derivative Action Plaintiff also contended that such special tax allocation unfairly reallocated tax obligations to public unitholders of EEP on more than US$880 million in EEP income.

On July 13, 2018 and July 16, 2018, representatives of Bracewell held telephonic meetings with representatives of S&C, in its capacity as counsel to Enbridge in the Derivative Action, to discuss certain matters related to the Derivative Action. During the meeting on July 16, 2018, representatives of S&C advised representatives of Bracewell that Enbridge was not prepared at that time to participate in the mediation process proposed by Brager, Eagel & Squire P.C. and Friedlander & Gorris.

On July 16, 2018, the EEQ Special Committee held a telephonic meeting with representatives of Bracewell, MNAT and Goldman Sachs. During the meeting, representatives of Goldman Sachs discussed with the EEQ Special Committee Goldman Sachs’ preliminary, illustrative financial analysis of the proposed EEQ Merger. Representatives of Bracewell then presented a summary of considerations that had been raised during prior meetings of each of the Special Committee and the EEQ Special Committee regarding whether any responsive proposal to Enbridge in respect of each of the proposed transactions should value the listed shares of EEQ and the Class A common units at parity for purposes of negotiation and outlining certain related considerations, including that the Class A common units and the listed shares of EEQ each have historically traded at a premium and a discount relative to the other security at a given time.

On July 18, 2018, the Special Committee held a telephonic meeting with representatives of Bracewell, MNAT and Evercore. During the meeting, representatives of Evercore presented the Special Committee with a preliminary analysis of the financial terms of the proposed Merger. Representatives of Bracewell further discussed considerations relating to EEP’s contractual obligations with respect to its tariffs that establish the rates, terms and conditions under which each system provides service to its customers.

On July 18, 2018, after markets closed, the FERC issued a further order (the “July FERC Announcement”) that (a) dismissed all requests for rehearing of the March FERC Announcement and explained that the March FERC Announcement did not establish a binding rule, but was instead an expression of general policy that the FERC intended to follow in the future, and (b) provided guidance that if an MLP or other tax pass-through pipeline eliminates its income tax allowance from its cost of service pursuant to the March FERC Announcement, then ADIT will similarly be removed from its cost of service and MLP pipelines may also eliminate previously-accumulated sums in ADIT instead of flowing ADIT balances back to ratepayers. Enbridge common shares closed 3.0% higher the day after the July FERC Announcement, the Class A common units closed 7.0% higher the day after the July FERC Announcement, and the listed shares of EEQ closed 4.5% higher the day after the July FERC Announcement, in each case, compared to their respective closing prices on the NYSE on the date of the July FERC Announcement.

On July 20, 2018, the EEP/EEQ Special Committees each engaged Morris James as special Delaware counsel to assist with their review of the Derivative Action. In deciding to retain Morris James the EEP/EEQ Special Committees took into consideration, among other things, that (a) Morris James did not represent the 2015 Special Committee and was not involved in the Derivative Action, (b) Bracewell represented the 2015 Special Committee and (c) MNAT represents Messrs. Connelly and Westbrook in the Derivative Action. An engagement letter dated July 20, 2018, detailing the terms of Morris James’ engagements as legal advisor to each of the Special Committee and the EEQ Special Committee was subsequently executed.

On July 21, 2018, representatives of Bracewell held a telephonic meeting with representatives of S&C, in its capacity as counsel to Enbridge in the Derivative Action, to discuss certain matters related to the Derivative Action.

 

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On July 23, 2018, the EEP/EEQ Special Committees held a joint telephonic meeting with representatives of Bracewell and Morris James. At that meeting, the EEP/EEQ Special Committees discussed the process for reviewing and evaluating the Derivative Action as part of the Special Committee’s review of the EEP Initial Proposal and the EEQ Special Committee’s review of the EEQ Initial Proposal. Following discussion at the meeting, each of the Special Committee and the EEQ Special Committee adopted resolutions forming a sub-committee (the “Derivative Action Subcommittee”) of each committee and in each case comprised solely of Mr. Waldheim, who is not party to the Derivative Action, in order to review, evaluate and consider the Derivative Action and to determine the value, if any, of the Derivative Claims and materiality thereof and to make such recommendations to the EEP/EEQ Special Committees, in its capacity as a subcommittee of each such committee, as it deems appropriate. Mr. Waldheim did not evaluate the value of the Direct Claims in the Derivative Action. In considering whether to form the Derivative Action Subcommittee, the EEP/EEQ Special Committees took into consideration, among other things, that (a) Mr. Waldheim did not serve on the 2015 Special Committee and was not a defendant in the Derivative Action and (b) Messrs. Connelly and Westbrook are named as defendants in the Derivative Action.

On July 25, 2018, representatives of Bracewell met with representatives of Friedlander & Gorris in person at the offices of Bracewell in Houston, Texas, to discuss certain matters related to the Derivative Action. Representatives of Morris James joined the meeting by telephone.

On July 25, 2018, representatives of BofAML provided representatives of Evercore and Goldman Sachs with updated management projections, taking into account the July FERC Announcement, for EEP on a standalone basis, and on July 27, 2018, representatives of BofAML provided representatives of Evercore and Goldman Sachs with updated management projections, taking into account the July FERC Announcement, for Enbridge on a standalone basis and pro forma, taking into account various scenarios with respect to the buy-ins of EEP, EEQ, SEP and ENF (the “Revised Management Projections”).

Also on July 25, 2018 and August 1, 2018, at the direction of the Special Committee, Evercore provided certain illustrative financial analysis of the 2015 Transaction, as of the date of the 2015 Transaction, to the Derivative Action Subcommittee for use in its analysis of the Derivative Claims.

On July 26, 2018, the EEP/EEQ Special Committees held a meeting in person at the offices of Bracewell in Houston, Texas, with representatives of Bracewell, Evercore and Goldman Sachs. Representatives of MNAT joined by telephone. At that meeting, representatives of Evercore and Goldman Sachs reviewed with the EEP/EEQ Special Committees a draft letter to Enbridge prepared by Evercore and Goldman Sachs at the request of the Special Committee and the EEQ Special Committee, respectively, as a potential response by each of the Special Committee and the EEQ Special Committee to the EEP Initial Proposal and the EEQ Initial Proposal, respectively. The Evercore and Goldman Sachs representatives explained to the Special Committee and the EEQ Special Committee, respectively, that the FERC’s guidance regarding ADIT had prompted EEP and Enbridge management to prepare and deliver to the financial advisors the Revised Management Projections, and then the representatives provided the EEP/EEQ Special Committees a high-level overview of the key changes in the Revised Management Projections relative to the Management Projections. The Evercore and Goldman Sachs representatives and the Special Committee and the EEQ Special Committee, respectively, then discussed various arguments to support negotiating for a higher exchange ratio in each of the proposed Merger and the proposed EEQ Merger. The EEQ Special Committee and the representatives of Goldman Sachs then discussed arguments to support negotiating for an exchange ratio in the proposed EEQ Merger equal to the exchange ratio in the proposed Merger. Also at the meeting, representatives of Bracewell explained that representatives of Friedlander & Gorris had met with representatives of Bracewell and Morris James on July 25, 2018, and that representatives of Bracewell had also met with representatives of S&C, in its capacity as counsel to Enbridge in the Derivative Action, on July 21, 2018, in each case to discuss certain matters related to the Derivative Action. Representatives of Bracewell then discussed potential additional conditions that the EEP/EEQ Special Committees could request in connection with the proposed transactions, including (a) that the Special Committee could request the Majority of the Minority Vote and (b) that the EEQ Special Committee could request that the

 

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proposed Merger be conditioned upon the consummation of the proposed EEQ Merger. Representatives of Bracewell further explained to the EEP/EEQ Special Committees that, if the proposed Merger is not conditioned upon the consummation of the proposed EEQ Merger, there would be a risk that if the proposed Merger is consummated but the proposed EEQ Merger is not consummated, the sole asset of EEQ would be interests in an entity that is no longer publicly traded.

On July 30, 2018, representatives of Friedlander & Gorris sent representatives of Bracewell a memorandum concerning the Derivative Action, who then distributed such memorandum to the Derivative Action Subcommittee and Morris James. The memorandum provided an update regarding some aspects of the Derivative Action Plaintiff’s litigation path and settlement path respecting the Derivative Action and the Derivative Action Plaintiff’s view of the merit and value of the Derivative Claims.

On July 31, 2018 and August 1, 2018, the Enbridge Board held its regular quarterly meeting, where members of Enbridge management provided an update to the Enbridge Board on the status and timeline of the negotiations with the EEP/EEQ Special Committees and the special committees of Enbridge’s other sponsored vehicles and on the July FERC Announcement.

On July 31, 2018, the Derivative Action Subcommittee held a telephonic meeting with representatives of Bracewell and Morris James. At the meeting, the Derivative Action Subcommittee received additional information relating to its ongoing consideration of the value, if any, of the Derivative Claims. Representatives of Bracewell and Morris James presented the legal advisors’ analysis relating to the standards applicable to the Derivative Action Subcommittee’s review and discussed the approach to the financial analysis of the Derivative Action. Representatives of Bracewell and Morris James also discussed with the Derivative Action Subcommittee the memorandum received from Friedlander & Gorris.

On August 2, 2018, in connection with its quarterly business update, EEP announced that, although assessing the near- and long-term implications of the July FERC Announcement would be challenging pending greater clarification from FERC, EEP estimated that the July FERC Announcement would result in a US$30 million positive impact to its distributable cash flow for 2018, assuming that the July FERC Announcement is retroactive to March 2018. EEP noted that this benefit to distributable cash flow partially offset the previously estimated US$120 million negative impact to EEP for 2018 of U.S. tax reform and the March FERC Announcement.

On August 2, 2018, the Special Committee held a telephonic meeting with representatives of Bracewell, MNAT and Evercore. During the meeting, representatives of Evercore presented the Special Committee with a preliminary analysis of the financial terms of the proposed Merger based on the Revised Management Projections. Also during the meeting, representatives of Bracewell and MNAT discussed with the Special Committee whether to negotiate for the Majority of the Minority Vote, and the Special Committee directed representatives of Bracewell to include such requirement in its revised draft of the Merger Agreement. Representatives of Bracewell also provided the Special Committee with an update on the status of the Derivative Action Subcommittee’s review process.

On August 2, 2018, the EEQ Special Committee held a telephonic meeting with representatives of Bracewell, MNAT and Goldman Sachs. During the meeting, representatives of Goldman Sachs discussed with the EEQ Special Committee Goldman Sachs’ preliminary, illustrative financial analysis of the proposed EEQ Merger. Also during the meeting, representatives of Bracewell and MNAT discussed with the EEQ Special Committee whether to negotiate for the proposed Merger to be conditioned upon the consummation of the proposed EEQ Merger, and the EEQ Special Committee directed representatives of Bracewell to include such a requirement in its revised draft of the EEQ Merger Agreement. Representatives of Bracewell also provided the EEQ Special Committee with an update on the status of the Derivative Action Subcommittee’s review process.

 

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During the afternoon on August 2, 2018, the Derivative Action Subcommittee held a telephonic meeting with representatives of Bracewell, Morris James and Evercore. At the meeting, representatives of Bracewell and Morris James provided a summary of the analysis of the Derivative Action to date.

On August 3, 2018, representatives of Bracewell and Morris James held a telephonic meeting with a representative of S&C, in its capacity as counsel to Enbridge in the Derivative Action, to discuss certain matters related to the Derivative Action.

On August 3, 2018, in connection with its quarterly business update, Enbridge announced that there were many uncertainties with respect to implementation of the July FERC Announcement, including the potential for different outcomes as a result of rate case or customer challenges, and that while there would be varying impacts to each of Enbridge’s sponsored vehicles, on a consolidated basis, Enbridge did not expect a material impact to its results of operations or cash flows over the 2018 to 2020 horizon.

On August 9, 2018, the Derivative Action Subcommittee held a telephonic meeting with representatives of Bracewell and Morris James. Representatives of Bracewell and Morris James presented to the Derivative Action Subcommittee a detailed summary of the review and analysis of the Derivative Action and representatives of Morris James presented a proposed methodology to value the Derivative Claims. Throughout the process of reviewing and analyzing the Derivative Action, representatives of Bracewell and Morris James, among other things, analyzed all prior Court of Chancery and Delaware Supreme Court opinions involving the Derivative Action, reviewed the Fourth Amended Complaint, the Motion to Dismiss briefing and the transcript of the hearing on the Motion to Dismiss for the Derivative Action, met with Friedlander & Gorris and considered materials provided by them, met with Paul Hastings and met telphonically with S&C, reviewed transcripts of depositions held in the Derivative Action and reviewed various other documents, including certain deposition exhibits. To arrive at an estimated value of the Derivative Claims, the Derivative Action Subcommittee first identified a range of recoverable damages for each of the three primary categories of alleged damages. The Derivative Action Subcommittee then applied a risk adjustment (stated as a percentage) to the range of recoverable damages for each of the three primary categories of damages which was intended to reflect the Derivative Action Subcommittee’s views regarding the likelihood of the Derivative Action Plaintiff recovering the range of recoverable damages on each of the three categories of alleged damages, assuming the claims would be resolved through trial and subsequent appeal. The Derivative Action Subcommittee then applied estimated prejudgment interest to the risk adjusted amounts to arrive at an estimated value of the claims assuming the claims would be resolved through trial and appeal. To determine an estimated value of the claims assuming the claims would be resolved through a settlement short of a full trial and appeal, the Derivative Action Subcommittee applied an estimated settlement adjustment to reflect the process of compromise that would be anticipated to occur in order to achieve a settlement of the claims short of a full trial and appeal. Finally, the Derivative Action Subcommittee averaged the estimated value of the claims assuming the claims would be resolved through trial and appeal with the estimated value of the claims assuming the claims would be resolved through a settlement short of a full trial and appeal based on the assumption that either outcome was equally likely. Mr. Waldheim, in his capacity of the sole member of the Derivative Action Subcommittee, determined a risk adjusted range of values for the Derivative Claims of US$88.4 million to US$111.2 million (with a midpoint of US$99.8 million) (such midpoint, the “Estimated Derivative Claims Value”). Such value did not include any assessment of the value of any Direct Claims brought in the Derivative Action.

On August 9, 2018, the EEP/EEQ Special Committees held a joint telephonic meeting with representatives of Bracewell and Morris James. Representatives of Bracewell and Morris James presented to the EEP/EEQ Special Committees a detailed summary of the Derivative Action Subcommittee’s review and analysis of the Derivative Action and representatives of Morris James provided a summary of the methodology used by the Derivative Action Subcommittee to value the Derivative Claims. The EEP/EEQ Special Committees accepted the range of values determined by the Derivative Action Subcommittee for the Derivative Claims and directed Bracewell to request that Evercore, on behalf of the Special Committee, and Goldman Sachs, on behalf of the EEQ Special Committee, factor the Estimated Derivative Claims Value into their respective analysis of the proposed Merger and the proposed EEQ Merger prior to the meeting to be held on August 10, 2018.

 

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On August 10, 2018, the EEP/EEQ Special Committees held a joint telephonic meeting with representatives of Bracewell, MNAT, Evercore and Goldman Sachs. During the meeting, representatives of Evercore presented the Special Committee with a preliminary analysis of the financial terms of the proposed Merger and representatives of Goldman Sachs presented to the EEQ Special Committee Goldman Sachs’ preliminary, illustrative financial analysis of the proposed EEQ Merger. The Special Committee and the EEQ Special Committee, with their respective advisors, reviewed, discussed and finalized a letter to Enbridge including a responsive proposal for the proposed Merger and the proposed EEQ Merger that included, among other things, an exchange ratio of 0.4000 Enbridge common shares for each issued and outstanding publicly held Class A common unit and for each issued and outstanding publicly held listed share of EEQ in the respective transactions. Following this discussion, the EEP/EEQ Special Committees determined to propose an exchange ratio of 0.4000 Enbridge common shares for each issued and outstanding publicly held Class A common unit and for each issued and outstanding publicly held listed share of EEQ in the respective transactions and directed Evercore and Goldman Sachs to deliver the letter as a responsive proposal to BofAML.

On August 13, 2018, at the direction of the EEP/EEQ Special Committees, representatives of Evercore and representatives of Goldman Sachs called representatives of BofAML to deliver a counterproposal of 0.4000 Enbridge common shares in exchange for each issued and outstanding publicly held Class A common unit and each issued and outstanding publicly held listed share of EEQ.

Later on August 13, 2018, representatives of Evercore and Goldman Sachs, on behalf of the EEP/EEQ Special Committees, respectively, shared a letter with representatives of BofAML that communicated the EEP/EEQ Special Committees’ responsive proposal, including, among other things, an exchange ratio of 0.4000 Enbridge common shares for each issued and outstanding publicly held Class A common unit and each issued and outstanding publicly held listed share of EEQ (the “August 13 Proposal”). The August 13 Proposal also included (a) the Special Committee’s proposal that the proposed Merger be conditioned upon the Majority of the Minority Vote and (b) the EEQ Special Committee’s proposal that the proposed Merger be conditioned upon the consummation of the proposed EEQ Merger. The August 13 Proposal noted that the EEP/EEQ Special Committees believed that the EEP Initial Proposal and the EEQ Initial Proposal undervalued EEP and EEQ, respectively, and, among other things, did not attribute appropriate value to the Derivative Action. The August 13 Proposal explained that the EEP/EEQ Special Committees established the Derivative Action Subcommittee, consisting solely of Mr. Waldheim, with the authority to review, evaluate and consider the Derivative Action, and that the Derivative Action Subcommittee, in consultation with its legal and financial advisors, determined that an estimated value of the Derivative Claims was US$111.2 million, which value the EEP/EEQ Special Committees included in the August 13 Proposal upon the recommendation of the Derivative Action Subcommittee.

On August 14, 2018, the EEP/EEQ Special Committees held a joint telephonic meeting with representatives of Bracewell, MNAT, Evercore and Goldman Sachs. At the meeting, representatives of Evercore and Goldman Sachs informed the Special Committee and the EEQ Special Committee, respectively that they had delivered the EEP/EEQ Special Committees’ responsive proposal to BofAML, and that BofAML had thereafter indicated it had provided the responsive proposal to Enbridge.

On August 17, 2018, representatives of BofAML, on behalf of Enbridge, shared a letter with representatives of Evercore and representatives of Goldman Sachs (the “August 17 Letter”). In the August 17 Letter, Enbridge made counteroffers (a) to the Special Committee of 0.3160 Enbridge common shares in exchange for each issued and outstanding publicly held Class A common unit and (b) to the EEQ Special Committee of 0.2960 Enbridge common shares in exchange for each issued and outstanding publicly held listed share of EEQ. The August 17 Letter noted that, based on the challenges EEP and EEQ continue to face, Enbridge believed that its offers represented an attractive alternative for EEP unitholders and EEQ shareholders, and Enbridge did not believe that the EEP/EEQ Special Committees’ identified value for the Derivative Claims were supported by relevant facts or applicable law, and that Enbridge ascribed no value to the Derivative Claims other than the costs associated with the defense of the Derivative Action. The August 17 Letter also noted that Enbridge’s counteroffer included the

 

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following conditions: (a) the Merger would not be conditioned on the closing of the EEQ Merger and (b) the Merger would not be subject to obtaining the Majority of the Minority Vote.

On August 20, 2018, the EEP/EEQ Special Committees held a joint telephonic meeting with representatives of Bracewell, MNAT, Evercore and Goldman Sachs. The Special Committee and the EEQ Special Committee discussed the August 17 Letter with their legal and respective financial advisors.

On August 24, 2018, Enbridge announced that it had entered into a definitive merger agreement with SEP to acquire all of the issued and outstanding SEP common units not currently owned by Enbridge and its affiliates at an exchange ratio of 1.111 Enbridge common shares for each issued and outstanding publicly held common unit of SEP.

On August 26, 2018, the EEP/EEQ Special Committees held a joint telephonic meeting with representatives of Bracewell, MNAT, Evercore and Goldman Sachs. After considering and discussing the August 17 Letter with their legal and respective financial advisors, the EEP/EEQ Special Committees directed Evercore and Goldman Sachs to deliver a responsive proposal to BofAML on behalf of the Special Committee and the EEQ Special Committee, respectively, setting forth an exchange ratio of 0.3720 Enbridge common shares for each issued and outstanding publicly held Class A common unit and each issued and outstanding publicly held listed share of EEQ. The Special Committee further proposed that the Merger be conditioned upon the Majority of the Minority Vote, and the EEQ Special Committee further proposed that the Merger be conditioned upon the consummation of the EEQ Merger.

On August 27, 2018, at the respective direction of the EEP/EEQ Special Committees, representatives of Evercore and representatives of Goldman Sachs called representatives of BofAML to deliver a counterproposal of 0.3720 Enbridge common shares in exchange for each issued and outstanding publicly held Class A common unit and each issued and outstanding listed share of EEQ.

Later on August 27, 2018, at the direction of the EEP/EEQ Special Committees, representatives of Goldman Sachs and Evercore shared a letter with representatives of BofAML that communicated the EEP/EEQ Special Committee’s responsive proposal, including, among other things, a proposed exchange ratio of 0.3720 Enbridge common shares for each issued and outstanding publicly held Class A common unit and each issued and outstanding publicly held listed share of EEQ (the “August 27 Proposal”). In the August 27 Proposal, the EEP/EEQ Special Committees noted that they did not believe the August 17 Proposal appropriately valued EEP and EEQ, including, among other things, the value of the Derivative Claims, which was reflected in the August 27 Proposal. The EEQ Special Committee maintained that the EEQ exchange ratio should be at parity with the EEP exchange ratio because the market has valued EEQ at parity with EEP, and a precedent transaction to the EEQ Merger, the acquisition by Kinder Morgan, Inc. of Kinder Morgan Energy Partners, L.P. (“KMP”) and Kinder Morgan Management, LLC (“KMR”), also assigned parity between the KMP units and KMR shares. In the August 27 Proposal, the Special Committee also proposed that the Merger be conditioned upon the Majority of the Minority Vote and the EEQ Special Committee further proposed that the Merger be conditioned upon the consummation of the EEQ Merger.

On August 28, 2018, representatives of Goldman Sachs and representatives of Evercore requested from Enbridge management updated pro forma projections for Enbridge, taking into account the final SEP exchange ratio of 1.111 Enbridge common shares for each issued and outstanding publicly held common share of SEP. Later on August 28, 2018, Enbridge management provided such updated projections to the EEP/EEQ Special Committees.

On August 29, 2018, Bracewell provided revised drafts of the Merger Agreement and the EEQ Merger Agreement to S&C (the “August 29 Merger Agreement Drafts”). The August 29 Merger Agreement Drafts provided, among other things, (a) for the Majority of the Minority Vote requirement, (b) that the Merger is conditioned upon the consummation of the EEQ Merger, (c) that Enbridge would reimburse up to US$4 million

 

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of EEP’s expenses incurred in connection with the proposed Merger if the Merger Agreement is terminated under certain circumstances and up to US$4 million of EEQ’s expenses incurred in connection with the proposed EEQ Merger if the EEQ Merger Agreement is terminated under certain circumstances, and (d) that EEP would pay distributions in respect of the Class A common units for each completed calendar quarter ended prior to the closing date of the Merger in an amount not less than US$0.35 per Class A common unit per calendar quarter. Both August 29 Merger Agreement Drafts also provided, among other things, for greater flexibility for EEP and EEQ, respectively, to entertain alternate proposals and respond to intervening events, and that the Special Committee and the EEQ Special Committees would remain in place through closing of the Merger and the EEQ Merger, respectively.

On August 29, 2018, the Delaware Court of Chancery issued a memorandum decision in the Derivative Action (the “August 29 Mesirov Decision”). The August 29 Mesirov Decision, among other things, dismissed all Direct Claims against defendants and all non-contractual claims against defendants affiliated with Enbridge, while denying dismissal of derivative claims for, among other things, breach of contract.

On August 30, 2018, Wanda M. Opheim, Senior Vice President, Finance of Enbridge, called Mr. Connelly to advise him that Enbridge would be sending a response to the August 27 Proposal and to request that Mr. Connelly attend a breakfast meeting in Houston, Texas with Ms. Opheim and Vern D. Yu, Executive Vice President & Chief Development Officer of Enbridge, to discuss the status of negotiations with respect to the proposed Merger and the proposed EEQ Merger.

On August 30, 2018, representatives of BofAML, on behalf of Enbridge, shared a letter with representatives of Evercore and representatives of Goldman Sachs (the “August 30 Letter”). In the August 30 Letter, Enbridge made counteroffers (a) to the Special Committee of 0.3200 Enbridge common shares in exchange for each issued and outstanding publicly held Class A common unit and (b) to the EEQ Special Committee of 0.2997 Enbridge common shares in exchange for each issued and outstanding publicly held listed share of EEQ. The August 30 Letter noted that, while Enbridge was still evaluating the August 29 Merger Agreement Drafts, Enbridge continued to believe (a) the closing of the Merger should not be conditioned on the closing of the EEQ Merger, (b) the Merger should not be subject to obtaining the Majority of the Minority Vote, (c) the Class A common units and the listed shares of EEQ should not be valued at parity given the different market valuations of the Class A common units and the listed shares of EEQ, which reflect the different terms and other attributes applicable to those securities, and (d) the value of the Derivative Claims was, at best, the costs associated with the defense of such Derivative Action, particularly given Enbridge’s assessment of the August 29 Mesirov Decision.

On August 31, 2018, Messrs. Waldheim and Westbrook held a telephonic meeting with representatives of Bracewell to discuss the August 29 Mesirov Decision.

Later on August 31, 2018, the EEP/EEQ Special Committees held a joint telephonic meeting with representatives of Bracewell, MNAT, Evercore and Goldman Sachs. After considering and discussing the August 30 Letter with their legal and respective financial advisors, the EEP/EEQ Special Committees directed Evercore and Goldman Sachs to deliver a responsive proposal to BofAML setting forth an exchange ratio of 0.3650 Enbridge common shares for each issued and outstanding publicly held Class A common unit and each issued and outstanding publicly held listed share of EEQ. The Special Committee further proposed that the Merger be conditioned upon the Majority of the Minority Vote and the EEQ Special Committee further proposed that the Merger be conditioned upon the consummation of the EEQ Merger. The EEP/EEQ Special Committees and their legal and respective financial advisors also discussed Enbridge’s request for a breakfast meeting with Mr. Connelly and determined that the meeting would not be appropriate at that time given how far apart the parties were on price. Mr. Connelly subsequently sent an email to Ms. Opheim declining the meeting.

Also on August 31, 2018, the EEQ Special Committee held a telephonic meeting with representatives of Bracewell, MNAT and Goldman Sachs. The EEQ Special Committee discussed the proposal that the listed shares of EEQ and the Class A common units be valued at parity for purposes of negotiation.

 

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On September 1, 2018, at the direction of the EEP/EEQ Special Committees, representatives of Evercore and representatives of Goldman Sachs shared a letter with representatives of BofAML that communicated the EEP/EEQ Special Committees’ responsive proposal, including, among other things, a counteroffer of 0.3650 Enbridge common shares in exchange for each issued and outstanding publicly held Class A common unit and each issued and outstanding publicly held listed share of EEQ (the “September 1 Proposal”). The September 1 Proposal reiterated the EEP/EEQ Special Committees’ requests that (a) the closing of the Merger be conditioned on the consummation of the EEQ Merger and (b) the Merger be conditioned on obtaining the Majority of the Minority Vote. The September 1 Proposal also noted that the Derivative Action Subcommittee had reviewed the August 29 Mesirov Decision and did not agree with Enbridge’s characterization of such decision, and that the August 29 Mesirov Decision did not change the Derivative Action Subcommittee’s prior determination of an estimated value of the Derivative Claims, which was reflected in the exchange ratio counterproposals presented in the September 1 Proposal.

On September 2, 2018, at the direction of the EEQ Special Committee, representatives of Goldman Sachs held a telephonic meeting with representatives of BofAML to further discuss the EEQ Special Committee’s proposal that the exchange ratio for the proposed EEQ Merger be treated at parity with the exchange ratio for the proposed Merger.

Between September 2, 2018 and September 3, 2018, Enbridge management and its advisors discussed internally the EEQ Special Committee’s proposal that the exchange ratio for the proposed EEQ Merger be treated at parity with the exchange ratio for the proposed Merger. Enbridge management considered, among other things, that (a) a precedent transaction to the EEQ Merger, the acquisition by Kinder Morgan, Inc. of KMP and KMR, also assigned parity between the KMP units and KMR shares, (b) the listed shares of EEQ were created to be economically equivalent securities to the Class A common units and therefore should have similar or near similar intrinsic valuations and (c) while listed shares of EEQ have recently traded at a discount to Class A common units, since the initial public offering of EEQ, there have been periods where listed shares of EEQ have traded at parity with and at a premium to Class A common units.

On September 3, 2018, representatives of BofAML, on behalf of Enbridge, shared a letter with representatives of Evercore and representatives of Goldman Sachs (the “September 3 Letter”). In the September 3 Letter, Enbridge made counteroffers to the EEP/EEQ Special Committees of 0.3200 Enbridge common shares in exchange for each issued and outstanding publicly held Class A common unit and each issued and outstanding publicly held listed share of EEQ. This counteroffer represented an increase in the exchange ratio in the proposed EEQ Merger to be treated at parity with the exchange ratio in the proposed Merger, but did not represent a change in the exchange ratio for EEP. Enbridge also conceded that the Merger would be conditioned on obtaining the Majority of the Minority Vote. However, Enbridge maintained its position that (a) the closing of the Merger should not be conditioned on the closing of the EEQ Merger, and (b) the value of the Derivative Claims was, at best, the costs associated with defending such Derivative Action.

On September 4, 2018, the EEP/EEQ Special Committees held a joint telephonic meeting with representatives of Bracewell. The EEP/EEQ Special Committees discussed their initial views on the September 3 Letter and possible responses thereto.

On September 5, 2018, the EEP/EEQ Special Committees held a joint telephonic meeting with representatives of Bracewell, MNAT, Evercore and Goldman Sachs. At the meeting, the EEP/EEQ Special Committees discussed the September 3 Letter with their legal and respective financial advisors. After considering and discussing the September 3 Letter, the EEP/EEQ Special Committees directed Evercore and Goldman Sachs to deliver a responsive proposal to BofAML setting forth an exchange ratio of 0.3500 Enbridge common shares for each issued and outstanding publicly held Class A common unit and each issued and outstanding publicly held listed share of EEQ.

Following the meeting on September 5, 2018, at the direction of the EEP/EEQ Special Committees, representatives of Evercore and representatives of Goldman Sachs called representatives of BofAML to deliver a

 

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counterproposal of 0.3500 Enbridge common shares in exchange for each issued and outstanding publicly held Class A common unit and each issued and outstanding listed share of EEQ.

On September 8, 2018, representatives of BofAML, on behalf of Enbridge, called representatives of Evercore to convey Enbridge’s position that it was not willing at that time to increase its offer of 0.3200 Enbridge common shares in exchange for each issued and outstanding publicly held Class A common unit and each issued and outstanding publicly held listed share of EEQ, as Enbridge believed such exchanges ratios were appropriate for EEP and EEQ, and that Enbridge viewed its willingness to agree to parity between the Exchange Ratio and the EEQ exchange ratio as a significant movement. Representatives of BofAML further communicated to representatives of Evercore that, notwithstanding Enbridge’s resolve in the exchange ratios it proposed, Enbridge was continuing to consider the EEP/EEQ Special Committees’ position.

On September 10, 2018, the EEP/EEQ Special Committees held a joint telephonic meeting with representatives of Bracewell, MNAT, Evercore and Goldman Sachs. At the meeting, the EEP/EEQ Special Committees discussed Enbridge’s September 8, 2018 response with their legal and respective financial advisors. The EEP/EEQ Special Committees engaged in a discussion of how Enbridge’s proposal compared to the various metrics on which it had evaluated the transactions and the current market price of the Class A common units and the listed shares of EEQ, and determined to reassert the offer made by the EEP/EEQ Special Committees on September 5, 2018. The EEP/EEQ Special Committees also considered whether it was appropriate to send a letter to the GP Delegate Board informing it that negotiations with Enbridge had reached an impasse and requesting that a discussion of the proposed transaction and alternatives thereto be included as an agenda item at the GP Delegate Board’s next meeting.

Following the meeting on September 10, 2018, at the direction of the EEP/EEQ Special Committees, representatives of Evercore and representatives of Goldman Sachs called representatives of BofAML to convey that the EEP/EEQ Special Committees believed an exchange ratio of 0.3200 Enbridge common shares in exchange for each issued and outstanding publicly held Class A common unit and each issued and outstanding publicly held listed share of EEQ undervalued EEP and EEQ, and the EEP/EEQ Special Committees were unwilling to enter into an agreement with Enbridge at such exchange ratios. The representatives of Evercore and representatives of Goldman Sachs reasserted the offer made by the EEP/EEQ Special Committees on September 5, 2018, and indicated to representatives of BofAML that the EEP/EEQ Special Committees were drafting a letter to be sent to the GP Delegate Board. Following the conversation, representatives of BofAML contacted representatives of Evercore to discuss the EEP/EEQ Special Committees’ proposed timing with respect to sharing such letter with the GP Delegate Board.

Between September 8, 2018 and September 11, 2018, Enbridge management held a number of internal discussions as well as discussions with Enbridge’s legal and financial advisors with respect to the exchange ratio. Enbridge management decided to increase its proposed exchange ratios for EEP and EEQ based on, among other things, the fact that the July FERC Announcement strengthened EEP’s outlook as compared to when the EEP Initial Proposal was delivered and Enbridge management’s belief that completing the buy-ins would be compelling for EEP unitholders and EEQ and Enbridge shareholders.

On September 11, 2018, representatives of BofAML, on behalf of Enbridge, called representatives of Evercore and representatives of Goldman Sachs to deliver an increased offer of 0.3275 Enbridge common shares in exchange for each issued and outstanding publicly held Class A common unit and each issued and outstanding publicly held listed share of EEQ.

On September 13, 2018, the EEP/EEQ Special Committees held a joint telephonic meeting with representatives of Bracewell, MNAT, Evercore and Goldman Sachs. At the meeting, the EEP/EEQ Special Committees discussed Enbridge’s September 11, 2018 proposal with their legal and respective financial advisors. After considering and discussing Enbridge’s proposal, the EEP/EEQ Special Committees directed Evercore and Goldman Sachs to deliver a responsive proposal to BofAML setting forth an exchange ratio of 0.3425 Enbridge

 

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common shares for each issued and outstanding publicly held Class A common unit and each issued and outstanding publicly held listed share of EEQ.

Also on September 13, 2018, the Special Committee held a telephonic meeting with representatives of Bracewell, MNAT and Evercore. Representatives of Evercore discussed with the Special Committee the exchange ratio in the proposed EEQ Merger, which the EEQ Special Committee had successfully negotiated with Enbridge to be treated at parity with the exchange ratio in the proposed Merger, in order to confirm with the Special Committee whether the Special Committee wished to negotiate for a higher exchange ratio independent of the exchange ratio in the proposed EEQ Merger. The Special Committee members considered the points raised by Evercore and determined not to take any action at the meeting.

Following the meetings on September 13, 2018, at the direction of the EEP/EEQ Special Committees, representatives of Evercore and representatives of Goldman Sachs called representatives of BofAML to deliver a counterproposal of 0.3425 Enbridge common shares in exchange for each issued and outstanding publicly held Class A common unit and each issued and outstanding publicly held listed share of EEQ.

During the afternoon of September 13, 2018, representatives of BofAML, on behalf of Enbridge, called representatives of Evercore and representatives of Goldman Sachs to deliver a counterproposal of 0.3325 Enbridge common shares in exchange for each issued and outstanding publicly held Class A common unit and each issued and outstanding publicly held listed share of EEQ.

During the afternoon of September 13, 2018, the EEP/EEQ Special Committees held a joint telephonic meeting with representatives of Bracewell, Evercore and Goldman Sachs. At the meeting, the EEP/EEQ Special Committees discussed Enbridge’s September 13, 2018 proposal with their legal and respective financial advisors. After considering and discussing Enbridge’s proposal, the EEP/EEQ Special Committees directed Evercore and Goldman Sachs to deliver a responsive proposal to BofAML setting forth an exchange ratio of 0.3375 Enbridge common shares for each issued and outstanding publicly held Class A common unit and each issued and outstanding publicly held listed share of EEQ.

Following the second joint committee meeting on September 13, 2018, at the direction of the EEP/EEQ Special Committees, representatives of Evercore and representatives of Goldman Sachs followed up with representatives of BofAML later on September 13, 2018 to deliver a counterproposal of 0.3375 Enbridge common shares in exchange for each issued and outstanding publicly held Class A common unit and each issued and outstanding publicly held listed share of EEQ.

During the evening of September 13, 2018, representatives of BofAML, on behalf of Enbridge, called representatives of Evercore and representatives of Goldman Sachs to deliver another counterproposal of 0.335 Enbridge common shares in exchange for each issued and outstanding publicly held Class A common unit and each issued and outstanding publicly held listed share of EEQ. Representatives of BofAML indicated that this was Enbridge’s “best and final” offer.

On September 14, 2018, the EEP/EEQ Special Committees held a joint telephonic meeting with representatives of Bracewell, MNAT, Evercore and Goldman Sachs. At the meeting, the EEP/EEQ Special Committees discussed Enbridge’s second proposal made on September 13, 2018, with their legal and respective financial advisors. The Special Committee and the EEQ Special Committee discussed various matters relating to the proposed Merger and the proposed EEQ Merger, respectively, including the status of the draft merger agreements. Following additional discussion, it was the consensus of the EEP/EEQ Special Committees that, based upon the totality of the factors and circumstances considered by the EEP/EEQ Special Committees and taking into account the advice of their respective financial advisors, Enbridge’s second September 13, 2018 proposal represented the best terms that the Special Committee would be able to negotiate with Enbridge in respect of the proposed Merger and the best terms that the EEQ Special Committee would be able to negotiate with Enbridge in respect of the proposed EEQ Merger.

 

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On September 14, 2018, at the respective direction of the EEP/EEQ Special Committees, representatives of Evercore and representatives of Goldman Sachs communicated that the Special Committee and the EEQ Special Committee, respectively, were prepared to approve the exchange ratio of 0.335 Enbridge common shares in exchange for each issued and outstanding publicly held Class A common unit and each issued and outstanding publicly held listed share of EEQ in the respective transactions, subject to the negotiation of mutually agreeable definitive documentation and the receipt by each committee of a fairness opinion from its respective financial advisor.

On September 14, 2018, S&C shared with Bracewell revised drafts of the Merger Agreement and the EEQ Merger Agreement. The revised draft Merger Agreement, among other things, (a) provided for an amendment to the EEP Partnership Agreement to be adopted by the General Partner in accordance with the EEP Partnership Agreement, (b) rejected the Special Committee’s proposal regarding distributions in respect of the Class A common units and (c) rejected the EEQ Special Committee’s proposal that the Merger be conditioned upon the consummation of the EEQ Merger. The revised draft EEQ Merger Agreement, among other things, provided for an amendment to the Company Agreement.

Between September 14, 2018 and September 17, 2018, Bracewell and S&C exchanged further drafts of the Merger Agreement and discussed outstanding open issues with respect to the Merger Agreement, including with respect to EEP’s payment of distributions between signing and closing and whether the Merger would be conditioned on the consummation of the EEQ Merger.

On September 17, 2018, the Enbridge Board, upon due consideration and discussion, unanimously (of those voting) (a) approved the Merger Agreement and the EEQ Merger Agreement and the transactions contemplated thereby, including the Merger and the EEQ Merger, on the terms and subject to the conditions set forth in the Merger Agreement and the EEQ Merger Agreement, respectively, and (b) approved the issuance of Enbridge common shares in connection therewith. The Enbridge Board also approved in the same meeting a definitive agreement between Enbridge and ENF and the issuance of Enbridge common shares in connection therewith.

On September 17, 2018, the Special Committee held a telephonic meeting with representatives of Bracewell, MNAT and Evercore. During the meeting, representatives of Bracewell discussed an overview of legal matters, the nature of the Derivative Action and the fact that the Special Committee considered the value of the Derivative Claims in its review and evaluation of the proposed Merger and that Evercore had considered the Estimated Derivative Claims Value in its analysis and the status of due diligence matters, and representatives of MNAT discussed the applicable legal standard for the Special Committee’s review. Representatives of Bracewell provided an overview of the terms of the final draft of the Merger Agreement, explained the final negotiated changes to the Merger Agreement, answered questions from the Special Committee regarding the agreement and also explained to the Special Committee the terms of an amendment to the EEP Partnership Agreement that had been proposed by Enbridge in connection with and conditioned upon the consummation of the proposed Merger. Representatives of Evercore presented its financial analysis of the Exchange Ratio. At the request of the Special Committee, Evercore then delivered its oral opinion, which was later confirmed by delivery of a written opinion dated September 17, 2018, that, as of September 17, 2018, and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations of the review undertaken by Evercore in rendering its opinion as set forth in the written fairness opinion, the Exchange Ratio was fair, from a financial point of view, to EEP and the holders of Class A common units other than Enbridge and its affiliates. Goldman Sachs does not express any view or opinion as to any term or aspect of the Merger, the Merger Agreement, or the transactions contemplated thereby. After further discussions and based on prior conclusions of the Special Committee with respect to the risks and merits of the merger transaction, the Special Committee unanimously (a) determined that the Merger Agreement and the transactions contemplated thereby are fair and reasonable to EEP, including the Unaffiliated EEP Unitholders, (b) approved the Merger Agreement and the transactions contemplated thereby, (c) approved the execution, delivery and performance of the Merger Agreement by EEP, (d) recommended that the GP Delegate Board approve the Merger Agreement, the execution, delivery and performance of the Merger Agreement by EEP and the consummation of the transactions contemplated thereby and (e) recommended that the GP Delegate Board submit the Merger Agreement to a vote of the limited partners

 

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of EEP and recommend the approval of the Merger Agreement and the transactions contemplated thereby by the limited partners of EEP.

On September 17, 2018, the EEQ Special Committee held a telephonic meeting with representatives of Bracewell, MNAT and Goldman Sachs. During the meeting, representatives of Bracewell discussed an overview of legal matters, the nature of the Derivative Action and the fact that the EEQ Special Committee considered the value of the Derivative Claims in its review and evaluation of the proposed EEQ Merger and that Goldman Sachs had reflected the Estimated Derivative Claims Value in its analysis and the status of due diligence matters, and representatives of MNAT discussed the applicable legal standard for the EEQ Special Committee’s review. Representatives of Bracewell provided an overview of the terms of the final draft of the EEQ Merger Agreement, explained the final negotiated changes to the EEQ Merger Agreement, answered questions from the EEQ Special Committee regarding the agreement and also explained to the EEQ Special Committee the terms of an amendment to the Limited Liability Company Agreement of EEQ that had been proposed by Enbridge in connection with and conditioned upon the consummation of the proposed EEQ Merger (the “Company Agreement Amendment”). Representatives of Goldman Sachs presented its illustrative financial analysis of the Exchange Ratio. After further discussions and based on prior conclusions of the EEQ Special Committee with respect to the risks and merits of the merger transaction, the EEQ Special Committee unanimously (a) determined that the EEQ Merger Agreement and the transactions contemplated thereby are fair and reasonable to EEQ, including the holders of listed shares of EEQ (other than Enbridge and its affiliates), (b) approved the EEQ Merger Agreement and the transactions contemplated thereby and the Company Agreement Amendment, (c) approved the execution, delivery and performance of the EEQ Merger Agreement by EEQ, (d) recommended that the GP Delegate Board approve the EEQ Merger Agreement, the Company Agreement Amendment, the execution, delivery and performance of the EEQ Merger Agreement by EEQ and the consummation of the transactions contemplated thereby and (e) recommended that the GP Delegate Board submit the EEQ Merger Agreement and the Company Agreement Amendment to a vote of the EEQ shareholders and recommend the approval of the EEQ Merger Agreement and the transactions contemplated thereby and the Company Agreement Amendment by the EEQ shareholders.

Later that day, based upon the recommendation of the Special Committee, the GP Delegate Board, in its capacity as the board of directors of the delegate of the General Partner, acting in good faith, unanimously (a) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are fair and reasonable to EEP, including the Unaffiliated EEP Unitholders, (b) approved the Merger Agreement and the transactions contemplated thereby, including the Merger, on the terms and subject to the conditions set forth in the Merger Agreement, (c) recommended that the GP Board approve the Merger Agreement and the transactions contemplated thereby, including the Merger, and (d) resolved to recommend that the limited partners of EEP approve the Merger Agreement and the transactions contemplated thereby and directed that the Merger Agreement be submitted to the limited partners of EEP for their approval. The GP Delegate Board, in its capacity as the board of directors of EEQ, based upon the recommendation of the EEQ Special Committee, also, acting in good faith, unanimously (a) determined that the EEQ Merger Agreement, the transactions contemplated thereby, including the EEQ Merger, and the Company Agreement Amendment are fair and reasonable to EEQ, including the EEQ public shareholders, (b) approved the EEQ Merger Agreement, the transactions contemplated thereby and the Company Agreement Amendment, on the terms and subject to the conditions set forth in the EEQ Merger Agreement and (c) resolved to recommend that holders of listed shares of EEQ approve the EEQ Merger Agreement, the transactions contemplated thereby and the Company Agreement Amendment, and waive Section 9.01(a)(v) of the Company Agreement, and directed that the EEQ Merger Agreement be submitted to the holders of listed shares of EEQ for their approval.

Also on September 17, 2018, based upon the recommendation of the GP Delegate Board, the GP Board, acting in good faith, unanimously (a) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are fair and reasonable to EEP, including the Unaffiliated EEP Unitholders, (b) approved the Merger Agreement and the transactions contemplated thereby, including the Merger, on the terms and subject to the conditions set forth in the Merger Agreement and (c) resolved to recommend that the

 

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limited partners of EEP approve the Merger Agreement and the transactions contemplated thereby and directed that the Merger Agreement be submitted to the limited partners of EEP for their approval.

Thereafter, on September 17, 2018, the Merger Agreement was executed by the parties thereto and the EEQ Merger Agreement was executed by the parties thereto.

On September 18, 2018, prior to market open, Enbridge, EEP and EEQ issued a joint press release announcing the execution of the Merger Agreement and the EEQ Merger Agreement, respectively. Enbridge also simultaneously issued a joint press release with ENF announcing its entry into a definitive agreement with respect to its acquisition of all of the outstanding publicly held shares of ENF.

Recommendation of the Special Committee

The Special Committee considered the benefits of the Merger Agreement, the Merger and the related transactions as well as the associated risks and, acting in good faith, unanimously (1) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are fair and reasonable to EEP, including the Unaffiliated EEP Unitholders, and (2) approved the Merger Agreement and the transactions contemplated thereby, including the Merger, on the terms and subject to the conditions set forth in the Merger Agreement. The Special Committee recommended that the GP Delegate Board approve the Merger Agreement and the transactions contemplated thereby, including the Merger.

Recommendation of the GP Delegate Board

Based upon the recommendation of the Special Committee, the GP Delegate Board, acting in good faith, unanimously determined that the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger, are fair and reasonable to EEP and the Unaffiliated EEP Unitholders, and approved the Merger Agreement and the transactions contemplated thereby, including the Merger, on the terms and subject to the conditions set forth in the Merger Agreement. The GP Delegate Board directed that the Merger Agreement be submitted to the limited partners of EEP for their approval. The GP Delegate Board recommends that the limited partners of EEP approve the Merger Agreement and the transactions contemplated thereby, including the Merger.

Recommendation of the GP Board

Based upon the recommendation of the GP Delegate Board, the GP Board, acting in good faith, unanimously determined that the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger, are fair and reasonable to EEP and the Unaffiliated EEP Unitholders, and approved the Merger Agreement and the transactions contemplated thereby, including the Merger, on the terms and subject to the conditions set forth in the Merger Agreement. The GP Board directed that the Merger Agreement be submitted to the limited partners of EEP for their approval. The GP Board recommends that the limited partners of EEP approve the Merger Agreement and the transactions contemplated thereby, including the Merger.

Reasons for the Recommendation of the Special Committee

In evaluating the Merger Agreement and the transactions contemplated thereby, the Special Committee considered information supplied by management of Enbridge and EEP, consulted with its legal and financial advisors and considered a number of factors in reaching its determination, approval and recommendation. The Special Committee also consulted with its legal advisors regarding its duties and obligations.

The Special Committee viewed the following factors as being generally positive or favorable in coming to its determination, approval and recommendation with respect to the Merger Agreement and the transactions contemplated thereby, including the Merger:

 

   

The Exchange Ratio of 0.335 of an Enbridge common share for each outstanding Class A common unit held by the Unaffiliated EEP Unitholders represents an implied market value of US$11.48 per Class A

 

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common unit based on the closing price of Enbridge common shares on September 17, 2018, the last trading day before the public announcement of the Merger, and represents an implied premium of 13.9% to the closing price of Class A common units on May 16, 2018, the last trading day before Enbridge made its initial proposal, and 17.4% to the 20-trading day volume-weighted average price of Class A common units for the period ended on May 16, 2018.

 

   

The financial analyses prepared by Evercore, as financial advisor to the Special Committee, and the oral opinion of Evercore delivered to the Special Committee on September 17, 2018, and subsequently confirmed in writing, that, as of September 17, 2018, and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations of the review undertaken by Evercore in rendering its opinion as set forth in the written fairness opinion (as more fully described below under “—Opinion of Evercore—Financial Advisor to the Special Committee”), the Exchange Ratio was fair, from a financial point of view, to EEP and the holders of Class A common units other than Enbridge and its affiliates

 

   

Through negotiation, the Special Committee was able to increase the Exchange Ratio by 8.7% as compared to the exchange ratio that was first proposed by Enbridge on May 17, 2018.

 

   

The Special Committee’s belief that the Merger is likely to present the best opportunity to maximize value for the Unaffiliated EEP Unitholders.

 

   

The Special Committee’s belief, based on statements from Enbridge, that Enbridge was unwilling to consider alternative transactions, including the reorganization of EEP into a c-corporation for tax purposes.

 

   

The Special Committee’s belief that it was unrealistic to expect an unsolicited third-party acquisition proposal to acquire assets or control of EEP in light of Enbridge’s ownership of the general partner interest in EEP and approximately 32.9% of the outstanding limited partner interest in EEP, and it was unlikely that the Special Committee could conduct a meaningful process to solicit interest in the acquisition of assets or control of EEP.

 

   

The Special Committee’s belief that the merger consideration represented the highest consideration that could be obtained from a potential business combination transaction with Enbridge, that the Merger was more favorable to the EEP Unitholders than continuing to hold Class A common units as a stand-alone entity, and that the merger consideration presents the best available opportunity to maximize value for EEP Unitholders in light of Enbridge’s stated position that it was unwilling to consider alternative transactions, such as converting EEP to a c-corporation for tax purposes.

 

   

The Special Committee’s assessment of the negative impact of recent regulatory changes on the long-term financial projections for EEP, including the impact on EEP’s financial outlook from the implementation of the TCJA, the March FERC Announcement and the July FERC Announcement.

 

   

The Special Committee’s belief, based on information received from Enbridge, that the International Joint Tariff Agreement between Enbridge Pipelines, Inc. and Enbridge Energy, Limited Partnership, effective May 6, 2011, could not be renegotiated to increase EEP’s revenue under such agreement.

 

   

The implications for the Unaffiliated EEP Unitholders of remaining with the status quo rather than approving the Merger Agreement and the Merger in light of EEP’s expected need for continuing financial support from Enbridge.

 

   

Enbridge’s stated position that EEP would need to issue US$500 million of additional Class A common units during 2018 as reflected in the Revised Management Projection, and the Special Committee’s belief that the Unaffiliated EEP Unitholders would experience significant dilution if such issuance occurred.

 

   

Enbridge’s stated position that EEP’s cost of capital is ineffective, EEP is no longer an effective financing vehicle for Enbridge and EEP’s valuation is not supportive of future asset contributions from Enbridge.

 

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The implications for the Unaffiliated EEP Unitholders of remaining with the status quo rather than approving the Merger Agreement and the Merger in light of Enbridge’s stated position that it intended to reduce the amount of quarterly cash distribution payments in respect of the Class A common units from US$1.40 per Class A common unit (on an annualized basis) to US$1.00 per Class A common unit (on an annualized basis) as reflected in the Revised Management Projections.

 

   

The Special Committee’s belief, based on informal guidance received by management of Enbridge from credit rating agencies and provided to the Special Committee, that EEP could experience a downgrade in its credit rating in the near term based on information contained in the Revised Management Projections without a significant equity investment, which Enbridge intends to be in the form of additional units issued to Enbridge.

 

   

The Special Committee’s belief that EEP would have access to greater financial and other resources and opportunities as a wholly owned subsidiary of Enbridge.

 

   

Upon completion of the Merger, EEP Unitholders will receive Enbridge common shares, which have substantially more liquidity than Class A common units because of the Enbridge common shares’ significantly larger average daily trading volume, as well as Enbridge having a broader investor base and a larger public float.

 

   

The Merger will provide EEP Unitholders with equity ownership in a combined company that is anticipated to have certain benefits as compared to EEP on a standalone basis:

 

   

The combined company will have an increased scale relative to EEP and is anticipated to have stronger coverage with respect to dividends, which is expected to result in (1) greater market confidence, (2) an enhanced outlook for dividend growth and (3) better positioning for varying and uncertain industry and commodity pricing environments.

 

   

The combined company is anticipated to be capable of pursuing larger and more meaningful growth opportunities and capital projects than could have been pursued by EEP alone.

 

   

The combined company will operate under a simplified corporate structure to create a stronger and more efficient company and which will, among other things, eliminate potential conflicts of interest between Enbridge and EEP.

 

   

The combined company is anticipated to experience cost savings and other efficiencies, including reduced filing requirements with the Commission and other cost savings, as a result of maintaining one public company rather than two.

 

   

The combined company will experience a step-up in tax basis resulting from the Merger and the SEP Merger.

 

   

Enbridge’s standalone credit metrics are stronger than EEP’s, and the Merger will further strengthen the combined company’s balance sheet by retaining a higher proportion of internally generated cash flow, thereby reducing the amount of debt financing required to fund growth capital expenditures.

 

   

The Exchange Ratio provided for pursuant to the Merger Agreement is fixed and therefore the implied value of the consideration payable to the Unaffiliated EEP Unitholders will increase in the event the market price of Enbridge common shares increases relative to the market price of Class A common units prior to the closing of the Merger.

 

   

The lack of significant regulatory hurdles to consummation of the Merger and, as a result, the fact that the Merger will likely be able to be consummated during the fourth quarter of 2018.

 

   

The fact that the terms and conditions of the Merger Agreement require EEP to continue to pay its regular quarterly cash distributions at historical levels for any completed quarters with a record date prior to the consummation of the Merger, and that Enbridge and EEP will coordinate the payment of dividends.

 

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Enbridge’s status as an entity taxed as a corporation for U.S. federal tax purposes provides a number of potential benefits relative to EEP’s structure as an MLP, including that the negative impact of the March FERC Announcement will be reversed.

 

   

The fact that the Merger Agreement requires Enbridge to pay US$4 million of costs incurred by EEP if the Merger is not approved by the EEP Unitholders, subject to certain exceptions.

 

   

In addition, the Special Committee considered a number of factors relating to the procedural safeguards involved in the negotiation of the Merger Agreement, including those discussed below, each of which supported its determination with respect to the Merger:

 

   

The fact that EEP Unitholders are free to approve or reject the Merger, and approval of the Merger requires the affirmative vote of (1) at least 66 2 3 % of the outstanding Class A common units and (2) a majority of the outstanding Class A common units (other than Class A common units owned by Enbridge and its affiliates) and the outstanding i-units voted at the direction of EEQ shareholders (other than EEQ shares owned by Enbridge and its affiliates), voting together as a single class.

 

   

The GP Delegate Board determined in the good faith exercise of its reasonable judgment to establish the Special Committee, composed of directors who are not officers of EEQ or officers, directors or employees of any affiliate of EEQ (other than serving as directors of the General Partner, for which EEQ acts as a delegate).

 

   

The Special Committee selected and retained its own legal and financial advisors with knowledge and experience with respect to public merger and acquisition transactions, MLPs, EEP’s industry generally and EEP particularly, as well as substantial experience advising MLPs and other companies with respect to transactions similar to the Merger.

 

   

The terms and conditions of the Merger Agreement were determined through arm’s length negotiations between the Special Committee and Enbridge and their respective representatives and advisors.

 

   

The Special Committee had no obligation to approve or recommend any transaction.

 

   

Prior to approval of the Merger Agreement by the EEP Unitholders, the Merger Agreement affords EEP flexibility to consider and evaluate superior proposals, and the Special Committee to change its recommendation in response to any such proposals and to certain intervening events, as follows:

 

   

EEP is permitted, subject to certain limitations, to enter into or participate in discussions or negotiations with, or furnish information to, any person in response to an unsolicited written acquisition proposal for EEP, if the Special Committee, after consultation with outside legal counsel and financial advisors, determines in good faith (1) that such acquisition proposal constitutes or is reasonably likely to result in, a proposal that, if consummated, would be more favorable to the Unaffiliated EEP Unitholders than the Merger and is reasonably likely to be consummated on the proposed terms or (2) that such acquisition proposal did not result from a material breach of the Merger Agreement terms regarding a change in the Special Committee’s recommendation.

 

   

EEP and the Special Committee are permitted, subject to certain limitations, to disclose to the Unaffiliated EEP Unitholders (1) a position contemplated in connection with certain tender offers or (2) such information that the Special Committee, after consultation with outside legal counsel and financial advisors, determines in good faith that the failure to disclose such information would be materially adverse to the interests of EEP or the Unaffiliated EEP Unitholders or would otherwise be reasonably likely to be inconsistent with its duties under applicable law or its obligations under the EEP Partnership Agreement.

 

   

The Special Committee is permitted, subject to certain limitations, to change its recommendation that the EEP Unitholders approve the Merger Agreement (1) if such change in recommendation

 

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occurs in response to receipt of a proposal that did not arise from or in connection with a breach of the no solicitation provisions in the Merger Agreement and the Special Committee, after consultation with outside legal counsel and financial advisors, determines in good faith that, if consummated, such transaction would be more favorable to the Unaffiliated EEP Unitholders than the Merger and is reasonably likely to be consummated and (2) in response to an intervening event involving facts not known to the Special Committee at the time it made its recommendation if the Special Committee, after consultation with outside legal counsel and financial advisors, reasonably determines in good faith that failure to change its recommendation would be materially adverse to the interests of EEP or the Unaffiliated EEP Unitholders or would otherwise be reasonably likely to be inconsistent with its duties under applicable law or its obligations under the EEP Partnership Agreement.

The Special Committee considered the following additional factors as being potentially negative or unfavorable in making its determination, approval and recommendation with respect to the Merger Agreement and the transactions contemplated thereby, including the Merger:

 

   

The Merger should be a taxable transaction to EEP Unitholders for U.S. federal tax purposes, and the EEP Unitholders will receive no cash consideration with which to pay any potential tax liability resulting from the Merger.

 

   

The U.S. federal tax treatment of owning and disposing of Enbridge common shares received in the Merger will be different than the U.S. federal tax treatment of owning and disposing of Class A common units, including that the income of the resulting combined entity will be subject to double taxation (at the combined company level and shareholder levels) for U.S. federal tax purposes, while the income of EEP is currently subject to only one level of tax (at the unitholder level).

 

   

The Special Committee’s view that the announcement of and market speculation regarding a possible simplification transaction that might involve Enbridge acquiring EEP resulted in the recent trading price ratio of Enbridge common shares to Class A common units being depressed, which, among other things, would negatively impact the premium for Class A common units implied by the Exchange Ratio.

 

   

The Exchange Ratio is fixed and therefore the implied value of the consideration payable to the Unaffiliated EEP Unitholders will decrease in the event the market price of Enbridge common shares decreases relative to the market price of Class A common units prior to the closing of the Merger.

 

   

The Special Committee’s expectation that the Merger will be dilutive to EEP’s distributable cash flow per limited partner unit and distribution per limited partner unit throughout the discrete forecast period.

 

   

The Special Committee was not authorized to and did not conduct an auction process or other solicitation of interest from third parties for the acquisition of EEP.

 

   

The Merger Agreement’s limitations on the Special Committee’s ability to solicit or knowingly encourage other offers, and the conditions it places on the Special Committee’s ability to negotiate or discuss alternative proposals with third parties, to change the recommendation of the GP Delegate Board that EEP Unitholders vote to approve the Merger Agreement or to terminate the Merger Agreement to accept a superior proposal.

 

   

The Merger Agreement restricts the conduct of EEP’s business prior to the completion of the Merger, which may delay or prevent EEP from pursuing business opportunities that may arise pending the completion of the Merger.

 

   

EEP has incurred and will continue to incur significant transaction costs and expenses in connection with the Merger, whether or not the Merger is completed, and EEP is not entitled to reimbursement of such costs and expenses unless the Merger Agreement is terminated under certain circumstances.

 

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There is risk that management’s focus and resources for other strategic opportunities and operational matters could be diverted for an extended period of time while the parties work to complete the Merger and integration process and by any litigation that may occur in connection with the Merger.

 

   

Litigation may be commenced in connection with the Merger, and such litigation may increase costs and result in a diversion of management’s focus.

 

   

There is risk that the potential benefits expected to be realized in the Merger might not be fully realized, or might not be realized within the expected time period.

 

   

The Merger may not be completed in a timely manner, or at all, which could result in significant costs and disruption to EEP’s normal business or negatively impact the trading price of Class A common units.

 

   

EEP Unitholders are not entitled to appraisal rights under the Merger Agreement, the EEP Partnership Agreement or Delaware law.

 

   

EEP Unitholders will be foregoing any potential benefits that could be realized by remaining common unitholders of a standalone entity.

 

   

The Enbridge common shares may not trade at expected valuations.

 

   

The resulting combined company may not achieve its projected financial results or expected synergies.

 

   

Some of the GP Delegate’s and the General Partner’s directors and executive officers have interests in the Merger that are different from, or in addition to, those of the Unaffiliated EEP Unitholders.

 

   

The risks of the type and nature described under the heading “Cautionary Statement Regarding Forward-Looking Statements” in this proxy statement and under the heading “Risk Factors” in the EEP Annual Report on Form 10-K for the year ended December 31, 2017, and subsequent reports it files under the Exchange Act. See “ Where You Can Find More Information ” beginning on page 166.

The Special Committee considered all of the foregoing factors as a whole and, on balance, concluded that they supported a determination to approve the Merger Agreement. The foregoing discussion of the information and factors considered by the Special Committee includes the material factors, but is not exhaustive. In view of the wide variety of factors considered by the Special Committee in connection with its evaluation of the Merger and the complexity of these matters, the Special Committee did not consider it practical to, and did not attempt to, quantify, rank or otherwise assign relative weights to the specific factors it considered in reaching its decision. The Special Committee evaluated the factors described above, among others, and reached a consensus that the Merger Agreement is fair and reasonable to EEP, including the Unaffiliated EEP Unitholders. In considering the factors described above, and any other factors, individual members of the Special Committee may have viewed factors differently or given weight or merit to different factors. The Special Committee approved the Merger Agreement and recommended it to the GP Delegate Board based on the totality of the information presented to and considered by it.

In considering the approval of the Merger Agreement by the Special Committee, you should be aware that the GP Delegate’s and the General Partner’s executive officers and directors have interests in the Merger that may be different from, or in addition to, the interests of EEP Unitholders generally. The Special Committee was aware of these interests and considered them when approving the Merger Agreement. See “ The Merger—Interests of Directors and Executive Officers of the GP Delegate and the General Partner in the Merger ” beginning on page 96.

The explanation of the reasoning of the Special Committee and certain information presented in this section are forward-looking in nature and, therefore, the information should be read in light of the factors discussed in the section entitled “ Cautionary Statement Regarding Forward-Looking Statements ” beginning on page 30.

 

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Opinion of Evercore—Financial Advisor to the Special Committee

The Special Committee retained Evercore to act as its financial advisor in connection with evaluating the proposed Merger. At the request of the Special Committee, at a meeting of the Special Committee held on September 17, 2018, Evercore rendered its oral opinion to the Special Committee (subsequently confirmed in writing) that, as of September 17, 2018, based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations of the review undertaken by Evercore in rendering its opinion as set forth therein, the Exchange Ratio was fair, from a financial point of view, to EEP and the holders of Class A common units other than Enbridge and its affiliates.

The opinion speaks only as of the date it was delivered and not as of the time the Merger will be completed or any other date. The opinion does not reflect changes that may occur or may have occurred after September 17, 2018, which could alter the facts and circumstances on which Evercore’s opinion was based. It is understood that subsequent developments or information of which Evercore is, or was, not aware may affect Evercore’s opinion, but Evercore does not have any obligation to update, revise or reaffirm its opinion.

The full text of the written opinion of Evercore, which sets forth the assumptions made, procedures followed, matters considered and qualifications and limitations of the review undertaken in rendering its opinion, is attached hereto as Annex  B . You are urged to read Evercore’s opinion carefully and in its entirety. Evercore’s opinion was directed to the Special Committee (in its capacity as such), and only addressed the fairness, from a financial point of view, as of September 17, 2018, to EEP and the holders of Class A common units other than Enbridge and its affiliates of the Exchange Ratio. Evercore’s opinion did not address any other term, aspect or implication of the Merger. Neither Evercore’s opinion, the summary of such opinion nor the related analyses set forth in this proxy statement/prospectus are intended to be, and they do not constitute, a recommendation to the Special Committee, the GP Delegate Board, the holders of the Class A common units or any other persons in respect of the Merger, including as to how any holder of Class A common units or I-units representing limited partner interests in EEP or any holder of listed shares of EEQ should vote or act in respect of the Merger or any other transaction. The summary of Evercore’s opinion set forth in this proxy statement/prospectus is qualified in its entirety by reference to the full text of the written opinion.

In connection with rendering its opinion, Evercore, among other things:

 

   

reviewed certain publicly-available business and financial information relating to Enbridge and EEP that Evercore deemed to be relevant, including the Annual Reports on Form 10-K for the year ended December 31, 2017, the Quarterly Reports on Form 10-Q for the quarters ended March 31, 2018 and June 30, 2018, and certain Current Reports on Form 8-K, in each case as filed with or furnished to the SEC by Enbridge or EEP, as applicable, since January 1, 2018;

 

   

reviewed certain non-public historical and projected financial and operating data and assumptions relating to Enbridge and EEP prepared and furnished to Evercore by the management of Enbridge and EEP, as applicable, and reviewed and approved for use in connection with Evercore’s opinion by the management of Enbridge and EEP, as applicable;

 

   

discussed the past and current operations, financial projections and current financial condition of Enbridge and EEP with management of Enbridge and EEP, as applicable (including their views on the risks and uncertainties associated therewith);

 

   

reviewed certain non-public projected financial data relating to EEP under alternative business assumptions prepared and furnished to Evercore by the management of EEP, and discussed the assumptions stated therein with the management of Enbridge and EEP;

 

   

reviewed certain cost savings and U.S. federal income tax synergies projected by the management of Enbridge and EEP to result from the Merger;

 

   

reviewed publicly-available research analysts’ estimates for each of Enbridge’s and EEP’s future financial performance on a standalone basis;

 

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performed discounted cash flow analyses on Enbridge and EEP based on forecasts and other data provided by the management of Enbridge and EEP, as applicable;

 

   

reviewed the reported prices and the historical trading activity of Enbridge common shares and the Class A common units since September 14, 2016;

 

   

compared the financial performance of Enbridge and EEP, utilizing forecasts and other data provided by the management of Enbridge and EEP, as applicable, and each of their stock market trading multiples with those of certain other publicly-traded partnerships and companies that Evercore deemed relevant;

 

   

compared the financial performance of Enbridge and EEP utilizing forecasts and other data provided by the management of Enbridge and EEP, as applicable, and the valuation multiples relating to the Merger with those of certain other transactions that Evercore deemed relevant;

 

   

reviewed a draft of the Merger Agreement dated September 16, 2018; and

 

   

performed such other analyses and examinations, held such other discussions, and considered such other factors and information that Evercore deemed appropriate.

For purposes of its analysis and opinion, Evercore assumed and relied upon, without undertaking any independent verification of, the accuracy and completeness of all of the information publicly-available, and all of the information supplied or otherwise made available, to, discussed with, or reviewed by Evercore, and Evercore assumed no liability therefor. With respect to the projected financial and operating data relating to Enbridge and EEP referred to above, Evercore assumed that they had been reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of the management of Enbridge and EEP, as applicable, as to the future financial performance of Enbridge and EEP, including projected financial data related to alternative business assumptions for EEP (including, among others, a conversion to a c-corporation) reflected therein. Evercore expressed no view as to any projected financial data relating to Enbridge or EEP or the assumptions on which they were based. Evercore relied, at the direction of the Special Committee, without independent verification, upon the assessments of the management of Enbridge and EEP and their outside advisors.

For purposes of rendering its opinion, Evercore assumed, in all respects material to its analysis, that the representations and warranties of each party contained in the Merger Agreement were true and correct, that each party would perform all of the covenants and agreements required to be performed by it under the Merger Agreement, that all conditions to the consummation of the Merger would be satisfied without material waiver or modification thereof, and that the Exchange Ratio would be 0.335 of an Enbridge common share per Class A common unit. Evercore further assumed, in all respects material to its analysis, that all governmental, regulatory or other consents, approvals or releases necessary for the consummation of the Merger (including the approval of unitholders to which this prospectus relates) would be obtained without any material delay, limitation, restriction or condition. Evercore relied upon and assumed, without independent verification, that the final version of the Merger Agreement, as well as the agreements, instruments and documents referenced therein, would not differ in any respect that is material to Evercore’s analysis from the respective drafts reviewed by it.

Evercore did not make nor did it assume any responsibility for making any independent valuation or appraisal of any assets or liabilities of Enbridge or EEP, nor was Evercore furnished with any such valuations or appraisals, nor did it evaluate the solvency or fair value of Enbridge or EEP under any state or federal laws relating to bankruptcy, insolvency or similar matters. Evercore’s opinion was necessarily based upon information made available to it as of the date of its opinion and financial, economic, market and other conditions as they existed and as could be evaluated on the date thereof.

Evercore was not asked to pass upon, and expressed no opinion with respect to, any matter other than the fairness, from a financial point of view, to EEP and the holders of the Class A common units (other than

 

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Enbridge and its affiliates) of the Exchange Ratio. Evercore did not express any view on, and its opinion did not address, the fairness of the Merger to, or any exchange ratio received in connection therewith by, the holders of any other securities, creditors or other constituencies of EEP, nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of EEP, or any class of such persons, whether relative to the Exchange Ratio or otherwise. Evercore assumed that any modification to the structure of the Merger subsequent to its review would not vary in any respect material to its analysis. Evercore’s opinion did not address the relative merits of the Merger as compared to other transactions or business or financial strategies that might be available to EEP, at the date of the opinion or in the future, including any potential transaction or strategy reviewed by Evercore, nor did it address the underlying business decision of Enbridge or EEP to engage in the Merger or use the Exchange Ratio. Evercore’s opinion did not constitute a recommendation to the Special Committee, the GP Delegate Board, the holders of the Class A common units or any other persons (including unitholders and holders of listed shares of EEQ receiving this proxy statement/prospectus) in respect of the Merger or any other transaction. Evercore expressed no opinion as to the price at which the Class A common units or Enbridge common shares will trade at any time. The opinion noted that Evercore is not a legal, regulatory, accounting or tax expert and that Evercore assumed the accuracy and completeness of assessments by Enbridge, EEP and their advisors with respect to legal, regulatory, accounting and tax matters. Without limiting the generality of the foregoing, Evercore’s opinion did not reflect the impact of any regulatory action, unasserted claims or litigation to which Enbridge, EEP or any of their respective affiliates may be subject in the future. Evercore’s opinion, at the direction and with the consent of the Special Committee, made no assumption or evaluation as to whether any assessment or valuation by EEP, Enbridge or the Special Committee of any pending litigation was appropriate or accurate, and the estimated value of any pending litigation used in Evercore’s analysis was provided to it by the Special Committee.

Summary Financial Analyses

Set forth below is a summary of the material financial analyses performed by Evercore and reviewed with the Special Committee on September 17, 2018 in connection with rendering Evercore’s opinion to the Special Committee. Each analysis was provided to the Special Committee. However, the following summary does not purport to be a complete description of the analyses performed by Evercore. In connection with arriving at its opinion, Evercore considered all of its analyses as a whole, and the order of the analyses described and the results of these analyses do not represent any relative importance or particular weight given to these analyses by Evercore. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data (including the closing prices for the Class A common units and Enbridge common shares) that existed on September 14, 2018, and is not necessarily indicative of current market conditions.

The following summary of financial analyses includes information presented in tabular format. These tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses performed by Evercore. Considering the tables below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Evercore’s financial analyses.

Financial data for Enbridge and EEP utilized in the financial analyses described below were based on, among other things, financial projections of Enbridge, on a standalone basis pro forma to give effect to the previously announced merger transaction between Enbridge and SEP based upon the final agreed upon terms, prepared by the management of Enbridge (which is referred to in this section as the “Enbridge forecast”), and financial projections of EEP on a standalone basis prepared by the management of EEP (which is referred to in this section as the “EEP forecast”).

Evercore performed a series of analyses to derive indicative valuation ranges for EEP Class A common units and Enbridge common shares. For each analysis, Evercore adjusted the implied EEP value per Class A

 

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common unit ranges and Enbridge value per share ranges to account for the Estimated Derivative Claims Value. This adjustment was performed on a per unit or per share basis, as applicable, and not on a cash flow basis. Evercore subsequently utilized each of the resulting implied valuation ranges for EEP and Enbridge to derive a range of implied exchange ratios of Class A common units to Enbridge common shares, and compared these ratios to the Exchange Ratio. The following is a summary of the material financial analyses performed by Evercore with respect to each of Enbridge and EEP in preparing Evercore’s opinion:

 

   

discounted cash flow analysis;

 

   

discounted distributions analysis; and

 

   

peer group trading analysis.

Evercore calculated the implied exchange ratio ranges reflected in the financial analyses described below by converting the implied EEP unit value ranges from U.S. dollars to Canadian dollars utilizing an exchange rate of 1.304 U.S. dollars per Canadian dollar based on FactSet data as of September 14, 2018, and then comparing (1) the low end of the EEP value per Class A common unit range to the low end of the Enbridge reference value per share range and (2) the high end of the EEP value per Class A common unit range to the high end of the Enbridge reference value per share. Evercore separately considered the impact of the Estimated Derivative Claims Value on the implied exchange ratio by comparing the implied EEP value per Class A common unit ranges and Enbridge value per share ranges after adjusting each per unit or per share value for the Estimated Derivative Claims Value. The Estimated Derivative Claims Value was provided to Evercore by the Special Committee and was not calculated, evaluated or analyzed by Evercore. The resulting implied exchange ratio ranges, both with and without adjustments for the Estimated Derivative Claims Value, were then compared with the Exchange Ratio.

In addition, Evercore performed certain other analyses which were reviewed with the Special Committee for informational and reference purposes only that were not material to Evercore’s opinion, including a premiums paid analysis and precedent M&A transactions analysis, as further described below.

Analysis of EEP

Discounted Cash Flow Analysis

Evercore performed a discounted cash flow analysis of EEP by valuing the cash flows to be received by EEP based on the EEP forecast and additional projected tax depreciation and amortization expense as provided by EEP management. Evercore calculated the EEP value per Class A common unit range by discounting, back to present value, EEP’s discrete unlevered free cash flows from July 1, 2018 through December 31, 2022 and estimated terminal values as of December 31, 2022, based on a range of estimated EBITDA exit multiples as well as perpetuity growth rates. Evercore selected a range of discount rates of 7.0% to 8.0% based on its professional judgment and expertise, including its analysis of the weighted average cost of capital (“WACC”) for EEP, taking into account a capital asset pricing model (“CAPM”) analysis for EEP’s cost of equity based on an analysis of characteristics of EEP and the selected comparable partnerships listed under the heading “EEP Peer Group Trading Analysis” below (the “Selected EEP Peers”). Evercore selected a range of EBITDA exit multiples of 10.0x to 12.0x based on its professional judgment and expertise, taking into account relevant implied multiples of Enterprise Value (as defined below) to EBITDA of the Selected EEP Peers, among other things. For the perpetuity growth rate assumption, Evercore selected a range of 1.25% to 1.75% based on its professional judgment and expertise, taking into consideration the long-term rate of inflation and regulations applicable to many of EEP’s assets, among other things. For both the EBITDA exit multiple approach and the perpetuity growth approach, Evercore calculated (i) the implied equity value per unit range and (ii) the implied equity value per unit range as adjusted for the Estimated Derivative Claims Value.

The Discounted Cash Flow Analysis utilizing the EBITDA exit multiple approach to calculate terminal value resulted in an implied equity value per unit range of US$10.71 to US$16.50 excluding the Estimated

 

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Derivative Claims Value and an implied equity value per unit range of US$10.92 to US$16.72 including the Estimated Derivative Claims Value. The Discounted Cash Flow Analysis utilizing the perpetuity growth approach to calculate terminal value resulted in an implied equity value per unit range of US$7.27 to US$13.92 excluding the Estimated Derivative Claims Value and an implied equity value per unit range of US$7.48 to US$14.13 including the Estimated Derivative Claims Value.

Discounted Distribution Analysis

Evercore performed a discounted distribution analysis for the Class A common units based on the present value of the future cash distributions to Class A common unitholders. Evercore utilized a terminal yield range of 9.5% to 12.5% based on EEP trading between EEP’s distribution reduction announced on May 4, 2017 and the March FERC Announcement, as well as EEP’s total distribution coverage and leverage by December 31, 2022. Evercore utilized a cost of equity of 9.5% to 11.5% based on CAPM and a cost of equity of 11.5% to 13.5% based on total expected market return for the Selected EEP Peers. Using the EEP forecast and a cost of equity based on CAPM, Evercore determined an implied equity value per unit range of US$11.24 to US$14.35 excluding the Estimated Derivative Claims Value and an implied equity value per unit range of US$11.46 to US$14.57 including the Estimated Derivative Claims Value. Using the EEP forecast and a cost of equity based on total expected market return, Evercore determined an implied equity value per unit range of US$10.55 to US$13.41 excluding the Estimated Derivative Claims Value and an implied equity value per unit range of US$10.77 to US$13.63 including the Estimated Derivative Claims Value.

EEP Peer Group Trading Analysis

Evercore performed a peer group trading analysis of EEP by reviewing and comparing the market values and trading multiples of the following publicly-traded partnerships that Evercore deemed to have certain characteristics similar to those of EEP:

 

   

Andeavor Logistics LP

 

   

Buckeye Partners, L.P.

 

   

Holly Energy Partners, L.P.

 

   

Magellan Midstream Partners, L.P.

 

   

MPLX LP

 

   

NuStar Energy LP

 

   

Phillips 66 Partners LP

 

   

Plains All American Pipeline, L.P.

 

   

Valero Energy Partners LP

Although the Selected EEP Peers were compared to EEP for purposes of this analysis, no partnership used in the peer group analysis is identical or directly comparable to EEP. In order to calculate peer group trading multiples, Evercore relied on publicly-available filings with the SEC and equity research analyst estimates.

For each of the Selected EEP Peers, Evercore calculated the following trading multiples:

 

   

Enterprise Value/2018 EBITDA, which is defined as market value of equity based on closing prices as of September 14, 2018, plus debt, plus preferred equity, plus noncontrolling interests and less cash and cash equivalents (“Enterprise Value”), divided by estimated EBITDA (per FactSet consensus, which may vary among the group) for the calendar year 2018; and

 

   

Enterprise Value/2019 EBITDA, which is defined as Enterprise Value divided by estimated EBITDA for the calendar year 2019.

 

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The mean and median trading multiples are set forth below. The table also includes relevant multiple reference ranges selected by Evercore based on the resulting range of multiples and certain other considerations related to the specific characteristics of EEP noted by Evercore.

 

Benchmark

   Mean      Median  

Enterprise Value/2018 EBITDA

     11.9x        12.3x  

Enterprise Value/2019 EBITDA

     10.7x        10.8x  

 

Benchmark

   Reference Range  

Enterprise Value/2018 EBITDA

     10.5x—12.5x  

Enterprise Value/2019 EBITDA

     9.5x—11.5x  

Evercore applied the relevant Enterprise Value to EBITDA multiple reference ranges to calendar year 2018 and calendar year 2019 Adjusted EBITDA per the EEP forecast to derive a relevant enterprise value range. Evercore determined an implied equity value per unit range of US$8.75 to US$15.79 excluding the Estimated Derivative Claims Value, and an implied equity value per unit range of US$8.97 to US$16.01 including the Estimated Derivative Claims Value.

Other EEP Analyses

The analyses and data described below were presented to the Special Committee for informational and reference purposes only and did not provide the basis for, and were not otherwise material to, the rendering of Evercore’s fairness opinion.

Precedent M&A Transaction Analysis

Evercore reviewed publicly-available information for selected transactions involving the acquisition by the sponsor entity of a MLP that Evercore deemed to have certain characteristics similar to those of EEP announced in the prior three years and selected six transactions:

 

Date
Announced

  

Acquirer

  

Target

08/2018

   Energy Transfer Equity, L.P.    Energy Transfer Partners, L.P.

03/2018

   Tallgrass Energy GP, LP    Tallgrass Energy Partners, LP

01/2018

   Archrock, Inc.    Archrock Partners, L.P.

06/2017

   World Point Terminal, Inc.    World Point Terminals, LP

02/2017

   ONEOK, Inc.    ONEOK Partners, L.P.

11/2015

   Targa Resources Corp.    Targa Resources Partners LP

Although the selected transactions were compared to the Merger for purposes of this analysis, no selected transaction used in the precedent M&A transaction analysis is identical or directly comparable to the Merger. Evercore reviewed the historical Price to Distributable Cash Flow per Unit observed in each of the selected transactions for (1) the current fiscal year for transactions announced before or on September 30 of such fiscal year and the following fiscal year for transactions announced after September 30 of the current fiscal year (“Current Year”) and (2) the year immediately following Current Year (“Forward Year”).

The mean and median implied multiples of Price to Current Year Distributable Cash Flow per Unit and Price to Forward Year Distributable Cash Flow per Unit are set forth below. The table also includes relevant multiple reference ranges selected by Evercore based on the resulting range of multiples and certain other considerations related to the specific characteristics of EEP noted by Evercore.

 

Benchmark

   Mean      Median  

Price/Current Year Distributable Cash Flow per Unit

     9.6x        9.1x  

Price/Forward Year Distributable Cash Flow per Unit

     9.1x        8.5x  

 

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Benchmark

   Reference Range  

Price/2018 Distributable Cash Flow per Unit

     8.5x—10.5x  

Price/2019 Distributable Cash Flow per Unit

     7.5x—9.5x  

Evercore applied the relevant ranges of selected multiples to fiscal year 2018 and fiscal year 2019 Distributable Cash Flow per Unit per the EEP forecast. Evercore determined an implied equity value per unit range of US$11.09 to US$15.87 excluding the Estimated Derivative Claims Value, and an implied equity value per unit range of US$11.31 to US$16.09 including the Estimated Derivative Claims Value.

Premiums Paid Analysis

Evercore compared the premiums implied by the Exchange Ratio with premiums received in selected related-party merger transactions where the target was an MLP or limited liability company. Evercore calculated the implied premiums received considering the implied per LP unit or per share offer value relative to the targets’ prior 1-day closing price, 30-day VWAP, 60-day VWAP and 90-day VWAP using publicly-available information. Evercore considered that premiums paid in the selected precedent merger transactions have varied widely based on specific considerations with respect to each transaction and that there are inherent differences between each of the targets and transactions analyzed by Evercore relative to EEP and the Merger, respectively. Evercore analyzed the following merger transactions:

 

Date

Announced

  

Acquirer

  

Target

8/2018

   Energy Transfer Equity, L.P.    Energy Transfer Partners, L.P.

6/2018

   Cheniere Energy, Inc.    Cheniere Partners LP Holdings, LLC

5/2018

   The Williams Companies, Inc.    Williams Partners L.P.

5/2018

   Enbridge Inc.    Spectra Energy Partners, LP

3/2018

   Tallgrass Energy GP, LP    Tallgrass Energy Partners, L.P.

2/2018

   NuStar Energy L.P.    NuStar GP Holdings, LLC

1/2018

   Archrock, Inc.    Archrock Partners, L.P.

6/2017

   World Point Terminals, Inc.    World Point Terminals, LP

5/2017

   Energy Transfer Partners, L.P.    PennTex Midstream Partners, LP

3/2017

   VTTI B.V.    VTTI Energy Partners LP

2/2017

   ONEOK, Inc.    ONEOK Partners, L.P.

1/2017

   Enbridge Energy Co, Inc.    Midcoast Energy Partners, L.P.

9/2016

   TransCanada Corporation    Columbia Pipeline Partners LP

8/2016

   Transocean Ltd.    Transocean Partners LLC

5/2016

   SemGroup Corporation    Rose Rock Midstream, L.P.

11/2015

   Targa Resources Corp.    Targa Resources Partners LP

10/2015

   Western Refining, Inc.    Northern Tier Energy LP

5/2015

   Crestwood Equity Partners LP    Crestwood Midstream Partners LP

8/2014

   Kinder Morgan, Inc.    Kinder Morgan Energy Partners, L.P.

8/2014

   Kinder Morgan, Inc.    El Paso Pipeline Partners, L.P.

The median and mean premiums are set forth below:

 

Premium

   Median     Mean  

1-Day

     12.7     11.8

30-Day VWAP

     10.1     12.6

60-Day VWAP

     12.0     15.1

90-Day VWAP

     14.0     16.1

Evercore reviewed the relevant merger premiums and derived a range of premiums to EEP’s relevant unit price as of May 16, 2018, the last trading day prior to Enbridge’s announcement of its proposed acquisition of

 

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EEP, of 8.0% to 18.0%. Evercore determined an implied equity value per unit range of US$10.89 to US$11.89 excluding the Estimated Derivative Claims Value based upon Enbridge’s common stock closing price on September 14, 2018 on the NYSE of US$33.89 per share, which implied an implied exchange ratio range of 0.3216x to 0.3513x. Including adjustments for the Estimated Derivative Claims Value to EEP’s closing unit price as of May 16, 2018 and Enbridge’s closing share price as of September 14, 2018 on the NYSE, Evercore determined an implied EEP equity value per unit range of US$11.12 to US$12.15 based upon Enbridge’s common stock closing price on September 14, 2018 on the NYSE of US$33.89 per share, which implied an exchange ratio range of 0.3285x to 0.3589x.

Analysis of Enbridge

Discounted Cash Flow Analysis

Evercore performed a discounted cash flow analysis of Enbridge by valuing the cash flows to be received by Enbridge based on the Enbridge forecast and additional projected unlevered cash taxes as provided by Enbridge management. Evercore calculated the value per share range for the Enbridge common shares by discounting, back to present value, Enbridge’s discrete unlevered free cash flows from July 1, 2018 through December 31, 2022 and estimated terminal values as of December 31, 2022 based on a range of estimated EBITDA exit multiples as well as perpetuity growth rates. Evercore selected a range of discount rates of 6.5% to 7.5% based on its professional judgment and expertise, including its analysis of the WACC for Enbridge, taking into account a CAPM analysis for Enbridge’s cost of equity based on an analysis of characteristics of Enbridge and the selected comparable companies listed under the heading “Enbridge Peer Group Trading Analysis” below (the “Selected Enbridge Peers”). Evercore selected a range of EBITDA exit multiples of 11.5x to 13.5x based on its professional judgment and expertise, taking into account relevant implied multiples of Enterprise Value to EBITDA multiples of the Selected Enbridge Peers, among other things. For the perpetuity growth rate assumption, Evercore selected a range of 1.25% to 1.75% based on its professional judgment and expertise, taking into consideration the expected long-term rate of inflation and regulations applicable to many of Enbridge’s assets, among other things. For both the EBITDA exit multiple approach and the perpetuity growth approach, Evercore calculated (i) the implied equity value per share range and (ii) the implied equity value per share range as adjusted for the Estimated Derivative Claims Value.

The Discounted Cash Flow Analysis utilizing the EBITDA exit multiple approach to calculate terminal value resulted in an implied equity value per share range of C$44.23 to C$62.02 excluding the Estimated Derivative Claims Value and an implied equity value per share range of C$44.20 to C$61.98 including the Estimated Derivative Claims Value. The Discounted Cash Flow Analysis utilizing the perpetuity growth approach to calculate terminal value resulted in an implied equity value per share range of C$41.67 to C$70.15 excluding the Estimated Derivative Claims Value and an implied equity value per share range of C$41.64 to C$70.12 including the Estimated Derivative Claims Value.

Discounted Dividend Analysis

Evercore performed a discounted dividend analysis of Enbridge common shares based on the present value of the future cash dividends to Enbridge common shareholders. The projected dividends used by Evercore were based on the Enbridge forecast, a terminal yield range of 4.5% to 7.0% based on Enbridge’s dividend yield range during the last 52 weeks, a cost of equity of 8.0% to 10.0% based on a CAPM analysis utilizing the Selected Enbridge Peers and a cost of equity of 10.5% to 13.5% based on the total expected market return utilizing the Selected Enbridge Peers. Using the Enbridge forecast and a cost of equity based on CAPM, Evercore determined an implied equity value per share range of C$44.94 to C$68.37 excluding the Estimated Derivative Claims Value and an implied equity value per share range of C$44.91 to C$68.34 including the Estimated Derivative Claims Value. Using the Enbridge forecast and a cost of equity based on total expected market return, Evercore determined an implied equity value per share range of C$39.79 to C$62.26 excluding the Estimated Derivative Claims Value and an implied equity value per share range of C$39.76 to C$62.23 including the Estimated Derivative Claims Value.

 

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Enbridge Peer Group Trading Analysis

Evercore performed a peer group trading analysis of Enbridge by reviewing and comparing the market values and trading multiples of the Selected Enbridge Peers, which consist of the following publicly-traded midstream companies and MLPs that Evercore deemed to have certain characteristics similar to those of Enbridge:

Canadian Midstream C-Corps

 

   

Pembina Pipeline Corporation

 

   

TransCanada Corporation

U.S. Midstream C-Corps

 

   

Dominion Energy Inc.

 

   

Kinder Morgan, Inc.

 

   

ONEOK, Inc.

 

   

Targa Resources Corp.

 

   

The Williams Companies, Inc.

Large-Cap / Diversified MLPs

 

   

Energy Transfer Equity, L.P.

 

   

Enterprise Products Partners L.P.

 

   

Magellan Midstream Partners, L.P.

 

   

MPLX LP

 

   

Plains All American Pipeline, L.P.

Although the companies and partnerships in the peer group were compared to Enbridge for purposes of this analysis, no company or partnership used in the Enbridge Peer Group Trading Analysis is identical or directly comparable to Enbridge. In order to calculate peer group trading multiples, Evercore relied on publicly-available filings with the SEC and other regulatory agencies and equity research analyst estimates.

For each of the peer group companies and partnerships, Evercore calculated the following trading multiples:

 

   

Enterprise Value/2018 EBITDA, which is defined as Enterprise Value, divided by estimated EBITDA for the calendar year 2018, as determined based on Wall Street research estimates;

 

   

Enterprise Value/2019 EBITDA, which is defined as Enterprise Value divided by estimated EBITDA for the calendar year 2019, as determined based on Wall Street research estimates; and

 

   

Current dividend or distribution yield, as applicable, as determined based on the most recently announced dividend per share or distribution per unit.

The mean and median trading multiples and dividend or distribution yields are set forth below. The table also includes relevant multiple ranges selected by Evercore based on the resulting range of multiples and dividend or distribution yields and certain other considerations related to the specific characteristics of Enbridge noted by Evercore.

 

Canadian Midstream C-Corps Benchmark

   Mean     Median  

Enterprise Value/2018 EBITDA

     11.9     11.9

Enterprise Value/2019 EBITDA

     11.0     11.0

Current Dividend Yield

     6.8     6.8

 

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U.S. Midstream C-Corps Benchmark

   Mean     Median  

Enterprise Value/2018 EBITDA

     12.9     12.5

Enterprise Value/2019 EBITDA

     11.9     11.7

Current Dividend Yield

     5.1     4.8

 

Large-Cap / Diversified MLPs Benchmark

   Mean     Median  

Enterprise Value/2018 EBITDA

     12.7     12.3

Enterprise Value/2019 EBITDA

     11.8     11.4

Current Distribution Yield

     6.0     5.9

 

Benchmark

   Reference Range  

Enterprise Value/2018 EBITDA

     11.5x—13.5

Enterprise Value/2019 EBITDA

     11.0x—13.0

Current Dividend Yield

     4.5%—   6.5

Evercore applied the selected Enterprise Value to EBITDA multiple reference ranges to EBITDA per the Enbridge forecast for calendar year 2018 and calendar year 2019 and applied the selected current dividend yield reference range to Enbridge’s current annualized dividend. Evercore determined an implied equity value per share range of C$35.88 to C$59.60 excluding the Estimated Derivative Claims Value, and C$35.84 to C$59.56 including the Estimated Derivative Claims Value.

Other Enbridge Analysis

The analysis and data described below were presented to the Special Committee for informational and reference purposes only and did not provide the basis for, and were not otherwise material to, the rendering of Evercore’s fairness opinion.

Precedent M&A Transaction Analysis

Evercore performed a valuation analysis of Enbridge common shares based on multiples of transaction value to EBITDA paid in historical transactions involving Canadian midstream corporations since 2015 that Evercore deemed relevant based on its experience in the midstream sector and in mergers and acquisitions involving midstream companies and partnerships, although Evercore noted that none of the selected transactions or the selected companies that participated in the selected transactions were directly comparable to the Merger or Enbridge. The following list sets forth the transactions analyzed based on such characteristics:

 

Date

Announced

  

Acquirer

  

Target

5/2017

   Pembina Pipeline Corporation    Veresen Inc.

9/2016

   Enbridge Inc.    Spectra Energy Corp

3/2016

   TransCanada Corporation    Columbia Pipeline Group, Inc.

For each of the selected transactions, Evercore calculated and compared the consolidated Enterprise Value of the target at the applicable offer value as a multiple of the target’s estimated current calendar year EBITDA. For purposes of this analysis, current calendar year represents the target’s current calendar year for transactions based upon the transaction announcement date. Evercore observed that the mean and median multiples of Enterprise Value to current calendar year EBITDA for the selected precedent transactions were 14.5x and 13.8x, respectively. Evercore derived a range of relevant implied multiples of Enterprise Value to current calendar year EBITDA of 13.0x to 15.0x for its precedent transactions analysis and applied this range to estimated calendar year 2018 EBITDA per the Enbridge forecast. Evercore determined an implied equity value per share range of C$45.88 to C$59.21 excluding the Estimated Derivative Claims Value, and an implied equity value per share range of C$45.84 to C$59.17 including the Estimated Derivative Claims Value.

 

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Exchange Ratio Summary

Evercore analyzed the implied exchange ratios resulting from the discounted cash flow analyses, discounted distribution/dividend analyses and peer group trading analyses utilized to value the Class A common units and Enbridge common shares. The resulting implied exchange ratio reference ranges utilizing each applicable valuation methodology are summarized below.

 

Benchmark

   Excluding
Adjustment for
Estimated

Derivative Claims
Value
     Including
Adjustment for
Estimated

Derivative Claims
Value
 

Discounted Cash Flow Analysis—EBITDA Multiple

     0.3155x—0.3468x        0.3222x—0.3516x  

Discounted Cash Flow Analysis—Perpetuity Growth

     0.2273x—0.2586x        0.2343x—0.2628x  

Discounted Distribution/Dividend Analysis—CAPM

     0.2737x—0.3262x        0.2779x—0.3327x  

Discounted Distribution/Dividend Analysis—Total Expected Market Return

     0.2808x—0.3457x        0.2855x—0.3532x  

Peer Group Trading Analysis

     0.3178x—0.3454x        0.3261x—0.3504x  

Evercore compared the results of the exchange ratio analysis to the Exchange Ratio, noting that the Exchange Ratio was within or above each of the implied exchange ratio ranges derived by Evercore from the aforementioned analyses.

Evercore also analyzed the implied exchange ratios resulting from the premiums paid analysis and precedent M&A transaction analysis and presented such analysis to the Special Committee for informational and reference purposes only. The results did not provide the basis for, and were not otherwise material to, the rendering of Evercore’s fairness opinion. The implied exchange ratios resulting from the EEP and Enbridge precedent M&A transaction analyses were derived in the same manner previously described. To derive the implied exchange ratio range based on the EEP premiums paid analysis, Evercore compared the implied values per Class A common unit, after converting to Canadian dollars at an exchange rate of 1.304 U.S. dollars per Canadian dollar as of September 14, 2018, with the Enbridge closing share price on the Toronto Stock Exchange as of September 14, 2018. Evercore also considered the Estimated Derivative Claims Value in the implied exchange ratio analysis. The resulting implied exchange ratio reference ranges utilizing each applicable valuation methodologies are summarized below.

 

Benchmark

   Excluding
Adjustment for
Estimated

Derivative Claims
Value
     Including
Adjustment for
Estimated

Derivative Claims
Value
 

Precedent M&A Transaction Analysis

     0.3152x—0.3494x        0.3216x—0.3544x  

Premiums Paid Analysis

     0.3216x—0.3513x        0.3285x—0.3589x  

While the resulting implied exchange ratios were calculated for information and reference purposes only, Evercore noted that the Exchange Ratio was within each of the implied exchange ratio ranges derived by Evercore.

General

The foregoing summary of certain material financial analyses does not purport to be a complete description of the analyses or data presented by Evercore. The Special Committee selected Evercore to provide financial advice in connection with its evaluation of the proposed Merger because of, among other reasons, Evercore’s experience, reputation and familiarity with the industry and because its investment banking professionals have substantial experience in transactions similar to the Merger. In connection with the review of the Merger, Evercore performed a variety of financial and comparative analyses for purposes of rendering its opinion to the

 

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Special Committee. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary described above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Evercore’s opinion. In arriving at its fairness determination, Evercore considered the results of all the analyses and did not draw, in isolation, conclusions from or with regard to any one analysis or factor considered by it for purposes of its opinion. Rather, Evercore made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all the analyses. In addition, Evercore may have given various analyses and factors more or less weight than other analyses and factors, may have deemed various assumptions more or less probable than other assumptions and, as described above, utilized certain assumptions and assessments provided by EEP without independent analysis. As a result, the ranges of valuations resulting from any particular analysis or combination of analyses described above should not be taken to be the view of Evercore with respect to the actual value of the Class A common units or Enbridge common shares. No company or partnership used in the above analyses as a comparison is directly comparable to EEP or Enbridge, and no precedent transaction used is directly comparable to the Merger. Furthermore, Evercore’s analyses involve complex considerations and judgments concerning financial and operating characteristics and other factors that could affect the acquisition, public trading or other values of the companies, partnerships or transactions used, including judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of EEP or Enbridge or their affiliates and their respective advisors.

Evercore prepared these analyses solely for the information and benefit of the Special Committee and for the purpose of providing an opinion to the Special Committee as to the fairness of the Exchange Ratio, from a financial point of view, to EEP and the holders of the Class A common units other than Enbridge and its affiliates. These analyses do not purport to be appraisals or to necessarily reflect the prices at which the business or securities actually may be sold. Any estimates contained in these analyses are not necessarily indicative of actual future results, which may be significantly more or less favorable than those suggested by such estimates. Accordingly, estimates used in, and the results derived from, Evercore’s analyses are inherently subject to substantial uncertainty, and Evercore assumes no responsibility if future results are materially different from those forecasted in such estimates. The issuance of the opinion was approved by an opinion committee of Evercore.

Except as described above, the Special Committee imposed no other restrictions or limitations on Evercore with respect to the investigations made or the procedures followed by Evercore in rendering its opinion. The Exchange Ratio was determined through arm’s length negotiations between the Special Committee and Enbridge, and the Special Committee approved the Merger Agreement and recommended the Merger Agreement to the GP Delegate Board for approval. Evercore provided advice to the Special Committee during these negotiations. Evercore did not, however, recommend any specific Exchange Ratio to the Special Committee, the GP Delegate Board or EEP or recommend that any specific Exchange Ratio constituted the only appropriate consideration for the Merger. Evercore’s opinion was only one of many factors considered by the Special Committee in evaluating the Merger and making its recommendation to the GP Delegate Board, and the opinion should not be viewed as determinative of the views of the Special Committee with respect to the Merger.

Under the terms of Evercore’s engagement letter with the Special Committee, EEP paid Evercore an initial fee of US$200,000 upon execution of its engagement letter with the Special Committee and a fee of US$3,000,000 (against which the initial fee was credited) upon Evercore’s rendering its opinion, which opinion fee was not contingent upon the conclusion reached in Evercore’s opinion or the consummation of the Merger. Evercore will be entitled to receive an additional fee of up to US$1,500,000 from EEP, subject to the sole discretion of the Special Committee. In addition, EEP has agreed to reimburse Evercore for its reasonable out-of-pocket expenses (including legal fees, expenses and disbursements) incurred in connection with its engagement. Such expenses are not to exceed US$75,000 without the prior consent of the Special Committee (such consent not to be unreasonably withheld). EEP also agreed to indemnify Evercore and any of its members, partners, officers, directors, advisors, representatives, employees, agents, affiliates and controlling

 

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persons, if any, against certain liabilities and expenses arising out of its engagement, or to contribute to payments which any of such persons might be required to make with respect to such liabilities.

Evercore and its affiliates engage in a wide range of activities for their own accounts and the accounts of customers. In the ordinary course of business, Evercore or its affiliates may actively trade the securities or related derivative securities or financial instruments of EEP, Enbridge and their respective affiliates, for its own account and for the accounts of its customers and, accordingly, may at any time hold a long or short position in such securities or instruments.

Since January 1, 2016, Evercore provided financial advisory services to the conflicts committee of the board of directors of Midcoast Holdings, L.L.C., an indirect subsidiary of Enbridge, for which Evercore received a fee of US$2,250,000. Except as described above, during the two-year period prior to the date hereof, no material relationship existed between Evercore and its affiliates and EEP, Enbridge or any of their respective affiliates, pursuant to which compensation was received by Evercore or its affiliates as a result of such a relationship. Evercore has in the past discussed potential engagements with the Special Committee from which no compensation was received. Evercore may provide financial or other services to Enbridge, EEP or their respective affiliates in the future and in connection with any such services Evercore may receive compensation.

Unaudited Financial Projections of Enbridge and EEP

In connection with the proposed Merger, management of Enbridge provided financial projections relating to Enbridge and EEP. The financial projections were prepared for Enbridge and EEP, on a standalone basis and taking into account the final SEP exchange ratio of 1.111 Enbridge common shares for each issued and outstanding common unit of SEP not owned by Enbridge or its subsidiaries (without giving effect to any of the Merger, the EEQ merger or the ENF plan of arrangement), and reflected during the periods presented the anticipated impacts of (1) the Midcoast Transaction, (2) the March FERC Announcement and the July FERC Announcement (together, the “FERC Announcements”), (3) the sale by Enbridge of certain renewable assets completed on August 1, 2018 (as described in Enbridge’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018) (the “Renewable Asset Sale”), and (4) the expected completion of the transactions contemplated by the agreements entered into by Enbridge with Brookfield Infrastructure Partners L.P. and its institutional partners to sell Enbridge’s Canadian natural gas gathering and processing businesses for a cash purchase price of approximately C$4.31 billion (as described in Enbridge’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018) (the “Canadian G&P Sale”). The financial projections were also prepared for Enbridge, on a pro forma basis and taking into account the final SEP exchange ratio of 1.111 Enbridge common shares for each issued and outstanding common unit of SEP not owned by Enbridge or its subsidiaries, as well as the initial exchange ratios for EEP, EEQ and ENF proposed by Enbridge on May 17, 2018 for the acquisitions of the publicly held securities of those entities of (a) 0.3083 of an Enbridge common share for each issued and outstanding Class A common unit not owned by Enbridge or its subsidiaries, (b) 0.2887 of an Enbridge common share for each issued and outstanding listed share of EEQ not owned by Enbridge or its subsidiaries and (c) 0.7029 of an Enbridge common share for each issued and outstanding common share of ENF not owned by Enbridge or its subsidiaries, and reflected during the periods presented the anticipated impacts of (1) the Midcoast Transaction, (2) the FERC Announcements, (3) the Renewable Asset Sale, and (4) the Canadian G&P Sale. These nonpublic financial projections were provided (a) to the Special Committee for Evercore’s use and consideration in its financial analysis and in preparation of its opinion to the Special Committee, and (b) for use and consideration in financial analysis prepared for the Enbridge Board. A summary of these projections is included below to give Unaffiliated EEP Unitholders and holders of Enbridge common shares access to certain nonpublic unaudited prospective financial information that was made available to the Special Committee, Evercore, the GP Delegate Board, the GP Board and the Enbridge Board in connection with the proposed Merger.

 

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You should be aware that uncertainties are inherent in prospective financial information of any kind. None of Enbridge or EEP or any of their affiliates, advisors, officers, directors, or representatives has made or makes any representation or can give any assurance to any EEP unitholder or Enbridge shareholder, or any other person regarding the ultimate performance of EEP or Enbridge compared to the summarized information set forth below or that any such results will be achieved.

The summary financial projections set forth below summarize the financial projections made available to the legal and financial advisors to each of the parties to the Merger Agreement. The inclusion of the following summary financial projections in this proxy statement/prospectus should not be regarded as an indication that EEP, Enbridge, or their respective representatives considered or consider the projections to be a reliable or accurate prediction of future performance or events, and the summary financial projections set forth below should not be relied upon as such.

The Enbridge and EEP financial projections were prepared in connection with the evaluation of the proposed Merger and for internal planning purposes only and not with a view toward public disclosure or guidance or toward compliance with generally accepted accounting principles in the U.S. (“GAAP”), the published guidelines of the SEC, or the guidelines established by the American Institute of Certified Public Accountants with respect to prospective financial information, but, in the view of Enbridge’s management, were prepared on a reasonable basis, reflected the best available estimates and judgments at such time, and presented, to the best of Enbridge management’s knowledge and belief, the expected course of action and expected future financial performance of Enbridge and EEP. However, because this information is highly subjective, it should not be relied on as necessarily indicative of future results. The Enbridge prospective financial information was prepared by and is the responsibility of Enbridge’s management. None of PricewaterhouseCoopers LLP (“PwC”), PricewaterhouseCoopers LLP, Canada or any other independent registered public accounting firm has audited, reviewed, compiled, examined or performed any procedures with respect to such financial projections, including any prospective financial information contained therein. Accordingly, neither PwC nor any other independent registered public accounting firm expresses an opinion or any other form of assurance with respect thereto. The reports of PwC incorporated by reference into this proxy statement/prospectus with respect to Enbridge and EEP relate to historical financial information of Enbridge and EEP. Such reports do not extend to the financial projections included below and should not be read to do so. None of the GP Board, the GP Delegate Board, the Special Committee, the GP Delegate, the General Partner, EEP, Enbridge, or the Enbridge Board gives any assurance regarding such financial projections. The Enbridge and EEP financial projections summarized below were prepared and provided to the Special Committee prior to the execution of the Merger Agreement on September 17, 2018. Such projections were prepared for Enbridge and EEP on a standalone basis, giving effect to the SEP merger in which the final SEP exchange ratio is 1.111 Enbridge common shares for each issued and outstanding common unit of SEP not owned by Enbridge or its subsidiaries (without giving effect to any of the Merger, the EEQ merger or the ENF plan of arrangement), and for Enbridge on a pro forma basis, giving effect to the SEP merger in which the final SEP exchange ratio is 1.111 Enbridge common shares for each issued and outstanding common unit of SEP not owned by Enbridge or its subsidiaries and giving effect to the initial exchange ratios proposed by Enbridge on May 17, 2018 for the acquisitions of the publicly held securities of EEP, EEQ and ENF of (a) 0.3083 of an Enbridge common share for each issued and outstanding Class A common unit not owned by Enbridge or its subsidiaries, (b) 0.2887 of an Enbridge common share for each issued and outstanding listed share of EEQ not owned by Enbridge or its subsidiaries and (c) 0.7029 of an Enbridge common share for each issued and outstanding common share of ENF not owned by Enbridge or its subsidiaries, respectively. The Enbridge and EEP financial projections do not take into account any circumstances or events occurring after the date they were prepared. Enbridge can give no assurance that, had the unaudited prospective financial information been prepared as of the date of this proxy statement/prospectus, similar estimates and assumptions would be used. ENBRIDGE DOES NOT INTEND TO, AND DISCLAIMS ANY OBLIGATION TO, MAKE PUBLICLY AVAILABLE ANY UPDATE OR OTHER REVISION TO THE UNAUDITED PROSPECTIVE FINANCIAL PROJECTIONS TO REFLECT CIRCUMSTANCES EXISTING SINCE THEIR PREPARATION OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS, EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING THE UNAUDITED PROSPECTIVE

 

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FINANCIAL PROJECTIONS ARE NOT REALIZED, OR TO REFLECT CHANGES IN GENERAL ECONOMIC OR INDUSTRY CONDITIONS, EXCEPT AS MAY BE REQUIRED BY APPLICABLE LAW.

The internal financial projections of Enbridge and EEP are, in general, prepared by Enbridge primarily for internal use. Such internal financial projections are inherently subjective in nature, susceptible to interpretation and, accordingly, such financial projections may not be achieved. Such internal financial projections also reflect numerous assumptions made by management of Enbridge, including material assumptions that may not be realized and are subject to significant uncertainties and contingencies, all of which are difficult to predict and many of which are beyond the control of Enbridge. Enbridge’s management, consistent with past presentations to the GP Board and public guidance representations, develops its financial projections according to several criteria. Additionally, anticipated impacts from prospective capital expenditures were included within the financial projections. Accordingly, there can be no assurance that the assumptions made in preparing the internal financial projections upon which the financial projections provided to the Special Committee were based will prove accurate. There will be differences between actual and forecasted results, and the differences may be material. The risk that these uncertainties and contingencies could cause the assumptions to fail to be reflective of actual results is further increased due to the length of time in the future over which these assumptions apply. Any inaccuracy of assumptions and projections in early periods could have a compounding effect on the projections shown for the later periods. Thus, any failure of an assumption or projection to be reflective of actual results in an early period could have a greater effect on the projected results failing to be reflective of actual events in later periods.

All of these assumptions involve variables making them difficult to predict, and some are beyond the control of EEP and Enbridge. Although Enbridge’s management believes that there was a reasonable basis for its financial projections and underlying assumptions, any assumptions for near-term projected cases remain uncertain, and the risk of inaccuracy increases with the length of the forecasted period. The projections are forward-looking statements and are subject to risks and uncertainties. Please read the sections titled “ Cautionary Statement Regarding Forward -Looking Statements ” and “ Risk Factors ” beginning on pages 30 and 33, respectively.

In developing the financial projections provided to the Special Committee, Enbridge’s management made numerous material assumptions with respect to Enbridge and EEP for the period from 2018 to 2022, including:

 

   

capital expenditures and operating cash flows, including the related amounts and timing thereof;

 

   

outstanding debt during applicable periods, and the availability and cost of capital;

 

   

the cash flow from existing assets and business activities;

 

   

the Midcoast Transaction, FERC Announcements, Renewable Assets Sale and Canadian G&P Sale;

 

   

management’s ability to mitigate the impact of the FERC Announcements, on a pre-merger basis, including planned rate case filings;

 

   

the prices and production of, and demand for, crude oil, natural gas, NGLs and other hydrocarbon products, which could impact volumes and margins;

 

   

the in-service dates of the significant competing liquids pipeline systems in Canada and the United States, which reflected a January 1, 2021 in-service date for TransCanada Corporation’s Keystone XL pipeline and an October 1, 2020 in-service date for the TransMountain Pipeline Expansion Project; and

 

   

other general business, market, and financial assumptions.

The summarized projected financial information for Enbridge and EEP set forth below was based on Enbridge’s and EEP’s standalone projected results for 2018 through 2022, adjusted for the material assumptions set out above, including the anticipated impacts of the SEP merger at the final exchange ratio for such

 

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transaction, the Midcoast Transaction, FERC Announcements, Renewable Assets Sale and Canadian G&P Sale, as applicable.

 

     Year ending December 31,  
     2018      2019      2020      2021      2022  
     (Millions of Canadian dollars)  

Enbridge Adjusted EBITDA (1)

   $ 12,509      $ 12,858      $ 14,778      $ 14,968      $ 16,578