Enbridge (ENB.US) has splurged $2.6 billion to acquire Tallgrass's crude oil business, which may become a "barometer" for energy relations amidst the clouds of the U.S.-Canada trade war.

Canadian energy infrastructure giant Enbridge (ENB.US) has reached an agreement to acquire the crude oil business of Tallgrass Energy from Blackstone (BX.US) for approximately $2.6 billion. As of the time of reporting, Enbridges stock fell nearly 3% in after-hours trading on Wednesday. According to a statement released on Wednesday, the deal includes a 75% interest in the Pony Express pipeline, a 51% interest in the Powder River Gateway system, and an oil storage capacity of 8.4 million barrels. The Pony Express pipeline spans approximately 900 miles and transports crude oil produced from fields in the Rocky Mountain region to Cushing, Oklahoma, one of the busiest crude oil hubs in the world. The Powder River Gateway system transports crude oil from the Powder River Basin to a pipeline hub in Guernsey, Wyoming. In this transaction, Enbridge will also acquire a crude oil marketing company, Stanchion Energy. Although Enbridge is headquartered in Calgary, Alberta, Canada, the company has a vast business presence in the United States, with its pipeline network delivering crude oil from western Canada and natural gas from the U.S. to utility companies, refineries, and liquefied natural gas export terminals across North America. In 2017, Enbridge acquired Spectra Energy for $28 billion, thereby becoming the largest energy pipeline and storage company in North America. The transaction is expected to be completed in late 2026. Data shows that this is the second-largest Canadian acquisition of a U.S. company this year and the largest deal since trade negotiations between the two countries broke down in August. It will serve as a test of whether the tariff war between the U.S. and Canada will extend into a relatively calm sector of the M&A marketthe energy pipeline industry. It remains unclear how this transaction will be evaluated in Washington, but U.S. President Trump has previously taken a keen interest in crude oil pipelines. In April, he signed a presidential permit authorizing the expansion of the Bridger pipeline to transport Canadian crude oil to Wyoming. This project is part of a partial revival of the Keystone XL pipeline project, which Trump sought to restart during his first term.