Emera and Canadian Utilities Agree to Merger of Equals Creating a C$72 Billion Utility Group

Emera and Canadian Utilities have agreed to a merger of equals that would create a utility and energy infrastructure company with about C$72 billion in pro forma enterprise value. The enlarged business is expected to have roughly C$45 billion in rate base, serve about six million customers and operate 12 regulated utilities across Canada, the United States and other markets.

The merged company would keep the Emera name and its public-company headquarters in Halifax. Canadian Utilities’ corporate and operating headquarters would remain in Calgary and Edmonton, with a continued presence in Perth, Australia, while Emera’s U.S. operations would stay headquartered in Tampa, Florida. Existing Emera shareholders are expected to own about 60% of the enlarged company after closing, with former ATCO and Canadian Utilities shareholders holding about 40%.

How the all-share merger is structured

The legal mechanics are more involved than the merger-of-equals label suggests. Under the definitive arrangement announced by Emera, Emera will acquire all issued and outstanding shares of Canadian Utilities and ATCO, while ATCO’s industrial services businesses will be separated into a newly listed company called New ATCO. The companies value the Canadian Utilities shares being acquired at about C$14.3 billion.

Canadian Utilities Class A shareholders other than ATCO are set to receive 0.755 Emera common shares for each Class A share. Holders of Canadian Utilities Class B shares other than ATCO would receive 0.819 Emera shares for each Class B share. ATCO Class I and Class II shareholders are due to receive 0.865 Emera common shares for each ATCO share, along with one corresponding New ATCO share.

The structure is designed to separate ATCO’s utility exposure from businesses that sit outside Canadian Utilities. New ATCO is expected to hold ATCO’s housing, defence and investment operations, including ports and retail energy. Nancy Southern, ATCO’s chair and chief executive, is slated to become chair and CEO of New ATCO, while Katie Patrick is expected to serve as chief financial and investment officer.

Control arrangements also matter because ATCO and Canadian Utilities have dual-class share structures. Sentgraf Enterprises holds all of ATCO’s voting shares and about 27% of its outstanding non-voting shares, according to the companies. ATCO, in turn, holds all voting shares of Canadian Utilities and about 37% of its non-voting shares. Sentgraf has signed a voting support agreement, and ATCO has agreed to vote its Canadian Utilities holdings in favor of the merger.

The enlarged utility would center growth on Florida and Alberta

The financial case rests heavily on scale in regulated utilities. About 95% of the enlarged company’s earnings are expected to come from regulated utility operations, with roughly 80% generated in Florida and Alberta. Emera currently gets about 70% of its earnings from Florida operations, while Canadian Utilities gets about 80% from Alberta.

Management is presenting the larger balance sheet as a way to support a broader investment program rather than as a cost-cutting story. A combined C$32 billion capital program is planned through 2030, supporting a forecast for average annual rate-base growth of 7% to 8%. They also say the merger should improve credit-rating thresholds and increase financial flexibility for electric transmission, natural-gas infrastructure, electrification and other capital-intensive projects.

Those benefits remain forecasts, not completed outcomes. Emera expects the merger to be accretive to adjusted earnings per share in the first full year after closing and says it expects its current investment-grade credit ratings and stable outlooks to be maintained. Canadian Utilities Class A shareholders are projected to see about a 20% increase in dividend income, although the companies explicitly note that the amount and timing of future dividends will remain at the discretion of Emera’s board after closing.

The C$72 billion figure is an enterprise-value measure, not a purchase price. For this figure, enterprise value means the enlarged company’s pro forma market capitalization plus net debt and preferred shares. Emera and Canadian Utilities also describe the merger as the largest between two Canadian companies based on an implied enterprise value of Canadian Utilities of about C$28 billion. That ranking is a company assertion tied to its chosen enterprise-value measure, rather than an independently established record.

Governance and approvals stretch into 2027

Scott Balfour, Emera’s president and CEO, is expected to lead the merged company. Canadian Utilities CEO Bob Myles would remain CEO of Canadian Utilities within the enlarged group, and Becky Penrice is expected to join the enlarged company’s executive team. The 13-member Emera board would include seven directors put forward by Emera and six by Canadian Utilities. Southern would become co-chair alongside Emera’s current chair, Karen Sheriff.

The merger still has a lengthy approval process. It is expected to be completed through a court-approved plan of arrangement under the Canada Business Corporations Act. Required votes include approvals from ATCO and Canadian Utilities securityholders and a simple majority of votes cast by Emera shareholders for the issuance of the Emera shares needed for the deal. Several of the ATCO and Canadian Utilities resolutions require two-thirds approval, with an additional minority approval requirement for Canadian Utilities Class A holders under Canadian related-party rules.

Regulatory review spans several jurisdictions. Required approvals or clearances may include the Court of King’s Bench of Alberta, the Alberta Utilities Commission, the U.S. Federal Communications Commission, the U.S. Federal Energy Regulatory Commission, Mexico’s antitrust authority, the Toronto Stock Exchange and the New York Stock Exchange. The deal also requires review or notification under Canadian competition and transportation laws, U.S. antitrust and foreign-investment rules, and Australian foreign-investment and competition laws.

ATCO’s dedicated merger page says New ATCO will become a separately traded company as the utility assets move into the enlarged Emera. Until the merger closes, Emera, ATCO and Canadian Utilities will continue to operate independently.

Closing is targeted for the third or fourth quarter of 2027, assuming the required votes and regulatory approvals are obtained. Before then, they plan to issue a joint management information circular with fuller details, including the arrangement agreement and fairness opinions, ahead of securityholder meetings expected in early 2027.