What happened

Enbridge (ENB -0.21%) is making a big bet on natural gas, and investors are worried that the Canadian energy distribution and production company's planned acquisition could cause it some near-term indigestion. Shares of Enbridge fell by as much as 6.7% on Wednesday morning following the company's big news.

As of 11:36 a.m. ET, they were still trading 5.6% lower.

So what

Late Tuesday, Enbridge announced plans to acquire three natural gas utilities from Dominion Energy (D 2.05%) for a total of $14 billion, including $9.4 billion in cash and about $4.6 billion of assumed debt. The deal would add natural gas utility operations in Ohio, North Carolina, Utah, Idaho, and Wyoming to Enbridge's existing Ontario-based operation.

The deal would double Enbridge's natural gas utility business to about 22% of total adjusted EBITDA and provide the company with a steady and reliable source of free cash flow. Post-deal Enbridge's gas utility business would rank as the largest in North America by volume.

"These acquisitions further diversify our business, enhance the stable cash flow profile of our assets, and strengthen our long-term dividend growth profile," CEO Greg Ebel said in a statement. "The assets we are acquiring have long useful lives and natural gas utilities are 'must-have' infrastructure for providing safe, reliable and affordable energy."

Enbridge is paying about 16.4 times earnings for the assets, and said it expects the deals to contribute to adjusted earnings per share in the first full year of ownership.

Now what

This deal makes strategic sense for Enbridge, and the assets appear reasonably priced. But it could at least temporarily strain the company's balance sheet.

Enbridge has obtained debt financing commitments totaling $9.4 billion from Morgan Stanley and Royal Bank of Canada to fund the cash consideration, but said it expects to keep its debt-to-adjusted-EBITDA ratio within its target range of 4.5 to 5. Investors will be watching closely to see how debt rating agencies view the deal.

Large acquisitions come with risks, and investors are understandably cautious. But with Wednesday morning's sell-off, the stock is now down 14% year to date and trades at levels last seen in early 2021. For investors able to stomach the near-term volatility that might come from this acquisition and who believe management will be able to navigate the integration successfully, it might be a good time to take a close look at Enbridge shares.