September 6, 2016

On Tuesday, the S&P 500 was up 0.3% and Toronto was up 0.1%.

Amazon was up 2.1% today.

Constellation software was down 2.7%.

Enbridge is buying Spectra for about $36 billion in Stock. Enbridge had been a fantastic investment and a well run company over the long term. This is probably a good deal for Enbridge that will benefit shareholders.

One mews story noted: “Shareholders of the Canadian acquirer will own about 57 per cent of the combined company.”

That is an important point, Warren Buffett would describe this as the existing shareholders of Enbridge trading 43% of Enbridge for 57% of Spectra . Plus the Enbridge shareholders will get 57% of any savings through synergies.

On the other hand Enbridge has said the deal allows it to commit to targeted dividend increases of 10 to 12% for the next eight years. From that point of view shareholders may not care what they own as long as it produces the dividend increases.