Enbridge Inc. (TSX: ENB, NYSE: ENB) announced it has entered into a definitive agreement to acquire the crude oil business of Tallgrass Energy, LP for $2.55 billion in cash, subject to customary closing adjustments.

The deal includes a 75% stake in Pony Express Pipeline, a 1,050-mile crude system with capacity of approximately 460,000 barrels per day (kbpd) connecting Rockies production to Cushing, Oklahoma. The acquisition also covers a 51% interest in the Powder River Gateway system, with combined capacity of approximately 240 kbpd, roughly 8.4 million barrels of storage across nine crude terminals, and Stanchion Energy, a crude marketing business.

Enbridge said the transaction represents an estimated acquisition multiple of 10 to 11 times forward enterprise value to EBITDA.

The acquired assets include the PXP2 growth project, a $300 million expansion of Pony Express expected to increase capacity to approximately 515 kbpd. PXP2 is underpinned by take-or-pay contracts and is expected to enter service in late 2027. Upon closing, the project will be added to Enbridge's $41 billion secured growth backlog.

"The Pony Express system is a premier crude oil corridor connecting some of North America's most productive basins with key refining and market centers," said Colin Gruending, Executive Vice President and President of Enbridge Liquids Pipelines.

Enbridge said an equity offering will partially fund this acquisition, along with the previously announced acquisition of Salt Creek Midstream's crude gathering business, and provide flexibility for future growth. The company said its 2026 financial guidance is not materially impacted by the announcement, given the transaction is expected to close later in 2026.

The transaction is subject to regulatory approvals, including clearance from the Federal Trade Commission under the Hart-Scott-Rodino Antitrust Improvements Act. Enbridge said it expects the deal to be accretive to distributable cash flow per share in the first full year of ownership.

Citi served as exclusive financial advisor, with Sidley Austin LLP and Sullivan & Cromwell LLP acting as legal advisors to Enbridge.