Emera and Canadian Utilities announce $72 billion merger to create utility giant

HALIFAX · Two major Canadian utility companies have agreed to merge in a deal that would create a combined entity valued at $72 billion. Emera Inc. and Canadian Utilities Ltd. announced the all-stock transaction, which they described as a merger of equals, on Tuesday. The new company would serve six million customers across Canada, the United States and international markets. The companies said the merger is the largest in Canadian history and will create a Canadian utility and energy infrastructure powerhouse.

The combined company will operate as Emera and remain headquartered in Halifax. Canadian Utilities’ corporate and operational headquarters in Calgary and Edmonton will be maintained. The companies said the transaction will form a top 20 North American utility. Emera chief executive Scott Balfour said the increased scale will help meet growing energy needs. "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," Balfour said in a release.

Under the terms of the deal, Emera shareholders are expected to own about 60 per cent of the combined company. Former ATCO and Canadian Utilities’ shareholders will receive approximately 40 per cent ownership. The transaction is expected to be accretive to adjusted earnings per share in the first full year following its closing, which is anticipated by the end of 2027. The deal would also mean a 20 per cent increase in dividends for Canadian Utilities shareholders.

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Scott Balfour will serve as chief executive of the combined company. Nancy Southern, executive chair of Canadian Utilities and chair and CEO of its parent company ATCO Ltd., will serve as co-chair of the Emera board alongside current chair Karen Sheriff. "Our goal is to create a Canadian champion," Balfour said in an interview. He said the merger will create a company with the scale and financial strength needed to build networks for projects like data centres and new pipelines.

The merger brings together Emera's operations in Nova Scotia, Florida and the Caribbean with Canadian Utilities’ assets in Alberta and Australia. Emera makes about 70 per cent of its earnings from operations in Florida. Canadian Utilities makes approximately 80 per cent from operations in Alberta. The combined company will generate about 95 per cent of its earnings from regulated utilities, with roughly 80 per cent coming from the high-growth jurisdictions of Florida and Alberta. "Natural gas and electrical infrastructure define our industrial policy, and will power our future," said Nancy Southern. She said the combined companies will be better positioned to serve rapidly growing economies in Alberta and Florida. In a related move, ATCO Ltd. will spin off its housing, defence and ports businesses into a separate publicly traded company that will still be called ATCO and be led by Southern.

Analyst Maurice Choy at RBC Capital Markets said in a report that for Emera shareholders, the news is slightly positive. He said the merger will better position Emera to boost its profits and its dividend, but the deal will take several years to yield significant synergies. For Canadian Utilities’ shareholders, Choy said the company now has better access to capital, which is needed given its significant growth opportunity. Credit agency Fitch Ratings placed Canadian Utilities and ATCO investment grade ratings on "negative watch" on Tuesday, which could raise borrowing costs.

The companies have been in talks for 15 months. Balfour first pitched Southern on a merger over a lunch at the Calgary Stampede in 2025. Southern said that after the initial approach, ATCO and Canadian Utilities looked at other potential partners before deciding a merger with Emera was the best way forward. Inside ATCO, the merger was code named "Project Maple" because "we felt it was important to Canada," Southern said.

If the deal is approved, the Southern family's holding company, Sentgraf Enterprises Ltd., would own approximately 7 per cent of Emera. This would make it one of the largest institutional investors in the utility with a stake worth more than $2 billion. Sentgraf has irrevocably agreed to vote its ATCO shares in favour of the Emera transaction, blocking any rival offer. On Tuesday, Emera’s share price fell 2.9 per cent to close at $66.31 on the Toronto Stock Exchange, while Canadian Utilities class A stock declined 1.9 per cent to $50.22 and ATCO’s share price rose 9 per cent to $81.02.

With files from Financial Post and The Globe and Mail