Two of the five largest U.S. M&A transactions ever announced in the energy sector have occurred in the past three months, which has caused the dollar value of energy sector M&A to reach a new annual record. According to data from S&P Global Market Intelligence, U.S. energy M&A deal value stands at over $221 billion year-to-date, topping the previous annual record of $219.1 billion set in 2014.
Most recently, Sunoco Logistics Partners L.P. (NYSE:SXL) (SXL) entered into a definitive agreement to acquire Energy Transfer Partners, L.P. (NYSE:ETP) (ETP) from Energy Transfer Equity, L.P. (NYSE:ETE) and other shareholders, in a transaction valued, with the inclusion of assumed liabilities, at $59.9 billion on November 20, 2016. That deal ranks as the third-largest U.S. energy M&A deal ever announced. On September 5, 2016, Canadian energy transportation and distribution company Enbridge Inc. (TSX: ENB) entered into a definitive agreement to acquire Spectra Energy Corp. (NYSE:SE) in a deal valued at $47.5 billion. In terms of valuations for announced U.S. energy M&A deals, the average multiple based on a ratio of a target’s twelve-month trailing EBITDA to the announced deal value was 11.1x for deals occurring this year, compared to a ratio of 14.5x for deals announced in 2014, the previous record year.
This year’s results would have been even larger, if not for the fact that the two largest U.S. energy M&A deal cancellations ever occurred this year. Energy Transfer Equity, L.P. (NYSE:ETE) cancelled the $67.2 billion acquisition of Williams Companies, Inc. (NYSE:WMB) on June 29, 2016, in a transaction originally announced in June 2015. Prior to this, on April 30, 2016, Halliburton Company (NYSE:HAL) cancelled the proposed $39.5 billion acquisition of Baker Hughes Incorporated (NYSE: BHI), which was initially announced in November 2014.
In terms of billion-dollar plus energy M&A deals, this year may fall short of the previous annual record. To date in 2016 there have been 24 announced U.S energy M&A deals of $1 billion or more. While that’s ahead of last year’s full count of 20 U.S. energy M&A deals of that dollar size, the current year seems headed to miss the record year of 2014, when 36 U.S. energy sector M&A deals of $1 billion or more were announced.