Emera (TSX: EMA) is not just combining with Canadian Utilities (TSX: CU) in one of Canada’s largest corporate transactions. The deal will also effectively dismantle the existing ATCO (TSX: ACO.X, ACO.Y) structure, separating its regulated utility holdings from businesses spanning housing, defence, ports, and retail energy.
Under the definitive agreement announced Tuesday, Emera will acquire Canadian Utilities and ATCO through an all-share arrangement. Canadian Utilities is valued at approximately $14.3 billion, while the resulting utility is expected to carry roughly $72 billion in enterprise value, a $45 billion rate base, and serve approximately six million customers.
Existing Emera shareholders are expected to own about 60% of the combined company, with former ATCO and Canadian Utilities shareholders holding the remaining 40%.
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Canadian Utilities Class A shareholders other than ATCO will receive 0.755 Emera shares for each share held. Class B holders will receive 0.819 Emera shares. ATCO shareholders will receive 0.865 Emera shares for each ATCO share, plus one corresponding share of a newly created company called New ATCO.
Based on Emera’s $68.30 October 5 closing price, the 0.755 exchange ratio implied approximately $51.57 of Emera stock for each Canadian Utilities Class A share, only about 0.7% above Canadian Utilities’ $51.20 closing price.
New ATCO will inherit the industrial-services side of the existing company, including businesses focused on housing and defence, along with investments in ports and retail energy. It will remain headquartered in Calgary, with Nancy Southern serving as chair and CEO.
ATCO’s controlling shareholder, Sentgraf Enterprises, has agreed to support the transaction. Sentgraf holds all of ATCO’s voting shares and approximately 27% of its non-voting shares. ATCO, in turn, controls Canadian Utilities’ voting shares.
The enlarged Emera would own 12 regulated utilities, with about 80% of operations concentrated in Florida and Alberta. Management plans $32 billion in capital spending through 2030 and forecasts average annual rate-base growth of 7% to 8%. The companies expect the transaction to increase Emera’s adjusted earnings per share in the first full year after closing.
The deal still faces shareholder, court, competition, utility, and foreign investment approvals across Canada, the US, Mexico, and Australia. Closing is targeted for the third or fourth quarter of 2027.
