Emera Inc. and Canadian Utilities Ltd. are planning a sweeping combination that would create a C$72 billion utility and energy infrastructure company serving about six million customers, while reshaping the businesses controlled by Calgary-based ATCO Ltd.
The all-stock transaction, described by the companies as a merger of equals, values Canadian Utilities at approximately C$14.3 billion and would rank the combined business among the 20 largest utilities in North America, according to reporting published by the Financial Post.
Under the proposed structure, Halifax-based Emera would acquire the outstanding shares of Canadian Utilities and ATCO. ATCO’s industrial-services operations would be separated into a new publicly traded company, allowing the utility assets to join Emera while businesses tied to housing, defence and other investments remain in a standalone organization, according to the Financial Post.
The transaction would leave existing Emera investors with about 60% of the enlarged utility. Former Canadian Utilities and ATCO shareholders would collectively own the remaining roughly 40%, the publication reported.
The scale of the combination reflects the enormous capital requirements facing electricity and natural-gas providers as demand rises from electrification, industrial expansion and large infrastructure projects. The companies plan approximately C$32 billion of capital investment through 2030 and expect their combined rate base to grow by an average of 7% to 8% annually, according to the Financial Post. The merged business would have an estimated C$45 billion rate base.
The portfolio would include 12 regulated utilities and bring together Emera’s operations in markets including Nova Scotia and Florida with Canadian Utilities’ businesses in Alberta and Australia. Roughly 80% of the combined company’s operations are expected to be concentrated in Alberta and Florida, according to information reported by the Financial Post.
Emera Chief Executive Officer Scott Balfour would lead the combined company. Canadian Utilities Executive Chair Nancy Southern, who is also ATCO’s chair and CEO, would become co-chair of Emera’s board alongside current Emera Chair Karen Sheriff, according to the publication.
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The company would continue operating under the Emera name and retain its public-company headquarters in Halifax. Canadian Utilities’ corporate and operating bases in Calgary and Edmonton would remain, as would its presence in Perth, Australia. Emera’s U.S. operations would continue to be headquartered in Tampa, Florida, the Financial Post reported.
The transaction also marks a significant restructuring of the ATCO group. Its non-utility operations would become a separately listed company known as New ATCO, focused on housing, defence and investments that include ports and retail energy. Southern would serve as chair and CEO of the new business, while Katie Patrick would become its chief financial and investment officer, according to the Financial Post.
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ATCO shareholders would receive stakes in both businesses. In addition to Emera shares issued as part of the transaction, investors would receive shares in New ATCO, giving them exposure to both the enlarged regulated utility and the separated industrial-services company.
Southern said the restructuring would give the businesses greater ability to pursue opportunities arising from increased infrastructure spending, economic expansion and growing attention to security and resilience, according to the Financial Post. She said the utility combination would have greater capacity to finance major energy projects, while the standalone ATCO business could focus more directly on housing, defence and industrial services.
Canadian Utilities CEO Bob Myles said the combination was intended to provide greater financial capacity for future energy-infrastructure investment, according to the publication. Management expects the transaction to add to Emera’s adjusted earnings per share in the first full year after completion. Canadian Utilities shareholders are also expected to see dividend income increase by about 20%, though future dividends would remain subject to decisions by Emera’s board.
The companies expect Emera’s existing investment-grade credit ratings and stable outlooks to remain intact after the combination, according to the Financial Post. Management argues that the larger and more geographically diverse business should have greater balance-sheet capacity to finance long-term infrastructure spending.
The agreement was approved by the boards of Emera, ATCO and Canadian Utilities following reviews that included independent special committees at ATCO and Canadian Utilities, the publication reported. ATCO’s controlling shareholder, Sentgraf Enterprises Ltd., has agreed to support the transaction.
Completion remains subject to shareholder, court and regulatory approvals in multiple jurisdictions. Special meetings of shareholders are expected in early 2027, with the transaction targeted to close by the end of that year, according to the Financial Post and transaction materials.
Until then, Emera, ATCO and Canadian Utilities are expected to continue operating separately.
The combination would give the enlarged Emera exposure to some of North America’s fastest-growing energy markets while creating a Canadian-headquartered company with substantially more capacity to finance power grids, natural-gas systems and other large infrastructure projects. If completed as proposed, the companies say it would represent the largest merger between two Canadian companies based on Canadian Utilities’ implied enterprise value.
Source: The Financial Post
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