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

HALIFAX — Halifax-based Emera Inc. and Calgary's Canadian Utilities Ltd. have announced a merger that would form a combined company valued at $72 billion and serve six million customers across Canada, the United States and international markets.

The "merger of equals" will be carried out through an acquisition by Emera of all the outstanding shares of ATCO-controlled Canadian Utilities, valued at approximately $14.3 billion.

"Our goal is to create a Canadian champion," said Scott Balfour, Emera's chief executive officer.

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The companies said the merger is the largest in Canadian history and will create a utility and energy infrastructure powerhouse "with the scale to help power Canada's growth ambitions."

Emera shareholders are expected to own about 60 per cent of the combined company, with former ATCO and Canadian Utilities' shareholders receiving approximately 40 per cent ownership.

The transaction is expected to close by the end of 2027, pending shareholder and regulatory approvals.

The new company will operate as Emera and remain headquartered in Halifax, while Canadian Utilities' corporate and operational headquarters in Calgary and Edmonton will be maintained.

Emera's Balfour will serve as chief executive of the combined company. Canadian Utilities executive chair Nancy Southern will serve as co-chair of the board with current chair, Karen Sheriff.

"Natural gas and electrical infrastructure define our industrial policy, and will power our future," said Southern, who is also chair and chief executive officer at ATCO.

She said the combined companies will be better positioned to serve power-hungry markets such as Alberta and expand into underserved regions such as northern Canada.

The transaction unites Emera utilities in Nova Scotia, Florida and the Caribbean with Canadian Utilities operations in Alberta and Australia.

Emera makes about 70 per cent of its earnings from operations in Florida, while Canadian Utilities makes approximately 80 per cent from operations in Alberta.

The combined company will create approximately 95 per cent of earnings from regulated utilities and approximately 80 per cent of earnings generated in Florida and Alberta, which the companies called two of the highest growth jurisdictions in North America.

In connection with the transaction, ATCO Ltd. will spin off its other businesses, including housing, defence and ports, into a separate publicly traded company. Nancy Southern will remain as ATCO chief executive.

She said the value of these holdings is not reflected in ATCO's current share price, which is one of the reasons she supports the Emera transaction.

Her family holding company, Sentgraf Enterprises Ltd., would own approximately 7 per cent of Emera if the transaction is approved, making it one of the largest institutional investors in the utility.

The three companies have been in talks for 15 months. Balfour said Prime Minister Mark Carney's campaign to attract up to $1-trillion in infrastructure investment encouraged all parties to strike a deal.

"This is a moment for Canada," Balfour said.

He said the merger will create a company with the scale and financial strength needed to build networks that support projects such as data centres, new natural gas pipelines and integrated provincial electrical grids.

The companies said the increased scale will position the new company to support a range of capital-intensive priorities, electrification projects, major natural gas and electric transmission investments, large load customers, export infrastructure and other large-scale energy infrastructure projects.

Emera is offering 0.755 of its share for each of Canadian Utilities non-voting class A shares and 0.819 of its shares for each Canadian Utilities class B shares. ATCO shareholders will receive 0.86 of a share in Emera for each of their shares.

The terms of the deal would mean Canadian Utilities shareholders receive a 20 per cent increase in dividends if the merger is approved.

Balfour first pitched Southern on a merger over a lunch at the Calgary Stampede in 2025. "Scott asked me to lunch, yet I ended up paying," Southern said.

She said after Balfour's initial approach, ATCO, Canadian Utilities and their advisers looked at other potential partners before deciding a merger with Emera was the best way forward.

She said inside ATCO, the merger was code named "Project Maple" because "we felt it was important to Canada."

Emera used mountains as code names for the three companies in internal documents to successfully avoid leaks, with Canadian Utilities known as Cascades, ATCO nicknamed Alpine and Emera called Everest.

The transaction comes as large U.S. utilities consolidate. In May, NextEra Energy Inc. and Dominion Energy Inc. announced a US$66.8-billion merger.

Emera hired investment bank Lazard and Bank of Nova Scotia as its financial advisers, along with law firm Osler, Hoskin & Harcourt LLP.

ATCO and Canadian Utilities used New York-based Gordon Dyal & Co. as their financial adviser and law firm Blake, Cassels & Graydon LLP.

With files from Financial Post and The Globe and Mail