Emera, ATCO, and Canadian Utilities have entered into a definitive agreement to merge Emera and Canadian Utilities as equals, creating a Canadian-headquartered utility and energy infrastructure company with an expected pro forma enterprise value of about $72 billion.
The transaction is expected to be the largest merger in history between two Canadian companies based on the implied enterprise value of Canadian Utilities and would create a Top 20 North American utility.
The combined company is expected to have approximately $45 billion in rate base, serve roughly six million customers and operate a portfolio of 12 regulated utilities across Canada, the U.S. and international markets.
Emera and Canadian Utilities also expect the combined business to execute a $32 billion capital plan through 2030, supporting projected average annual rate base growth of between 7% and 8%.
The merger of equals will be implemented through Emera’s acquisition of all outstanding Canadian Utilities shares, which are valued at approximately $14.3 billion.
The transaction will be entirely stock-based, allowing Canadian Utilities shareholders to continue participating in the larger combined utility company.
Canadian Utilities Class A shareholders other than ATCO will receive 0.755 Emera common shares for each Canadian Utilities Class A share they own.
Canadian Utilities Class B shareholders other than ATCO will receive 0.819 Emera common shares for each Class B share.
ATCO Class I and Class II shareholders will receive 0.865 Emera common shares for each ATCO share.
In addition to the Emera consideration, ATCO shareholders will receive shares in a newly created publicly traded company called New ATCO.
ATCO plans to spin off its industrial services operations into New ATCO, which will focus on housing, defense and investments, including ports and retail energy.
Each ATCO Class I shareholder will receive one New ATCO Class I share for each existing Class I share, while Class II shareholders will receive one New ATCO Class II share for each existing Class II share.
Sentgraf Enterprises, ATCO’s sole voting shareholder, will receive all of New ATCO’s voting shares, while existing ATCO non-voting shareholders will receive New ATCO non-voting shares on a pro rata basis.
Following completion, existing Emera shareholders are expected to own approximately 60% of the combined utility company.
Former ATCO and Canadian Utilities shareholders are expected to collectively own approximately 40%.
Canadian Utilities shareholders are also expected to receive an approximately 20% increase in dividend income as part of their participation in the larger combined company.
The merged utility will continue operating under the Emera name.
Its public company headquarters will remain in Halifax, Nova Scotia, while Canadian Utilities will maintain corporate and operating headquarters in Calgary and Edmonton and a significant presence in Perth, Australia.
Emera’s U.S. operations will continue to be headquartered in Tampa, Florida.
The companies said approximately 95% of the combined company’s earnings are expected to come from regulated utilities.
Approximately 80% of earnings are expected to originate in Florida and Alberta, two markets the companies identify as among North America’s highest-growth jurisdictions.
Emera currently generates approximately 70% of its earnings from operations in Florida, while Canadian Utilities generates approximately 80% from Alberta.
The companies believe the combination will provide greater financial capacity to pursue investments related to electrification, natural gas and electric transmission, large-load customers, export infrastructure and other major energy projects.
The enlarged company is also expected to benefit from increased geographic and regulatory diversification, stronger access to capital and greater balance sheet capacity.
Emera expects the transaction to be accretive to adjusted earnings per share during the first full year after closing.
The company also expects to maintain its current investment-grade credit ratings and stable outlooks, with no impact on ratings at its existing rated operating subsidiaries.
Scott Balfour, currently President and CEO of Emera, will serve as President and CEO of the combined company.
Bob Myles will remain Chief Executive Officer of Canadian Utilities and join Emera’s executive team.
Becky Penrice will join Emera’s executive team as Executive Vice President of Corporate Transformation and Integration.
Leadership teams across the companies’ operating businesses are expected to remain unchanged.
The combined company will have a 13-member Board of Directors.
Canadian Utilities will put forward six directors and Emera will put forward seven.
Nancy Southern will become Co-Chair of Emera’s Board alongside current Emera Chair Karen Sheriff.
New ATCO will remain headquartered in Calgary and continue operating internationally.
Southern will serve as Chair and Chief Executive Officer of New ATCO, while Katie Patrick will serve as Chief Financial & Investment Officer.
The new standalone company will pursue opportunities related to housing affordability, defense readiness, critical infrastructure, economic security, ports, retail energy and industrial services.
ATCO expects the separation to give the industrial services businesses their own leadership, capital structure and strategic focus while allowing shareholders to retain exposure to both New ATCO and the combined Emera-Canadian Utilities company.
Sentgraf, which owns approximately 27% of ATCO’s outstanding non-voting shares and all of its voting shares, has signed an agreement to support the transaction and vote against competing acquisition proposals.
ATCO, which owns approximately 37% of Canadian Utilities’ outstanding non-voting shares and all of its voting shares, has also agreed to support the combination.
Directors and executive officers of ATCO, Canadian Utilities and Emera have entered into voting support agreements covering their respective shares.
The boards of Emera, ATCO and Canadian Utilities approved the transaction following review processes that included independent special committees at ATCO and Canadian Utilities.
Fairness opinions were provided by several financial advisers, including Gordon Dyal & Co., CIBC World Markets, BMO Capital Markets, Lazard and Scotiabank.
The transaction will be completed through a court-approved plan of arrangement under the Canada Business Corporations Act.
It requires multiple shareholder approvals from ATCO, Canadian Utilities and Emera, along with court, regulatory and stock exchange approvals.
Required regulatory reviews include approvals or notifications involving the Alberta Utilities Commission, U.S. Federal Communications Commission, U.S. Federal Energy Regulatory Commission, Mexico’s competition authority, Toronto Stock Exchange, New York Stock Exchange and other Canadian, U.S. and Australian authorities.
The transaction is expected to close during the third or fourth quarter of 2027.
Lazard is serving as lead financial adviser to Emera, with Scotiabank also acting as financial adviser and Osler, Hoskin & Harcourt serving as legal adviser.
Gordon Dyal & Co. is serving as lead financial adviser to ATCO and Canadian Utilities.
BMO Capital Markets is advising the Canadian Utilities Special Committee, while CIBC World Markets is advising the ATCO Special Committee.
Blake, Cassels & Graydon is serving as legal adviser to ATCO, Stikeman Elliott is advising the Canadian Utilities Special Committee and Norton Rose Fulbright Canada is advising the ATCO Special Committee.
KEY QUOTES:
“Today marks an important moment for our companies and the customers and communities we serve. This merger creates a Canadian utility and energy infrastructure powerhouse with the scale, financial capacity and expertise to invest in the systems our customers will rely on for decades. As demand rises from electrification trends and major infrastructure development, the combined company will be better positioned to help meet growing energy needs and power Canada’s growth ambitions. Our shared commitment to safety, employees, customers and communities will guide us as we bring our organizations together.”
Scott Balfour, President and Chief Executive Officer of Emera
“Over the years, the Emera Board has proudly supported the company’s growth and embraced transformative opportunities that had the potential to create lasting value. We believe this is one of those opportunities. Bringing together Emera and Canadian Utilities is a rare chance to build on the strengths of two successful companies and create an even stronger enterprise, with greater capacity to invest, grow and help meet the evolving needs of customers and communities. The Board enthusiastically supports this combination and believes it will create lasting value for shareholders, customers, employees and communities for years to come.”
Karen Sheriff, Chair of the Board of Emera
“This transaction represents a defining next chapter for ATCO. For nearly eight decades, our people have built businesses that provide essential infrastructure and services to communities and countries. Today, we are creating a structure that we believe unlocks the full growth potential of these businesses and positions them to play an even greater role in powering the future.
ATCO shareowners will participate in two focused and compelling companies. The combined Emera/Canadian Utilities company will have the scale, capabilities and capital to invest in critical energy and infrastructure projects that support growing demand, while New ATCO will be positioned to accelerate growth in housing, defence and industrial services. Together, these companies are expected to be better equipped to pursue opportunities created by economic growth, infrastructure expansion and increasing focus on security and resilience, creating long-term value for shareowners and Canadians alike.”
Nancy Southern, Chair and Chief Executive Officer of ATCO
“This merger is about unlocking the next wave of growth for Canadian Utilities and the customers and communities we serve. By bringing Canadian Utilities and Emera together, we will combine complementary strengths, proven operating expertise and greater financial capacity to invest in the energy infrastructure needed for the future. We believe that the result will be a stronger, more resilient company—one that is better positioned to pursue new opportunities, support our people and communities, and deliver long-term value for shareholders.”
Bob Myles, Chief Executive Officer of Canadian Utilities Limited
