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CALGARY — Emera and Canadian Utilities have reached a deal to combine in a merger of equals that the companies say would create a $72-billion Canadian utility and energy infrastructure company serving about six million customers.
The transaction would bring together Halifax-based Emera and Calgary-based Canadian Utilities, while ATCO would spin off its industrial services operations into a separate publicly traded company.
The companies say the merger is expected to be the largest in Canadian history between two Canadian companies and would create a top-20 North American utility.
The combined company would operate under the Emera name and have an estimated $45 billion in rate base across Canada, the United States and international markets.
Its public company headquarters would remain in Halifax, while Canadian Utilities’ corporate and operational headquarters would remain in Calgary and Edmonton. The company would also maintain operations in Perth, Australia, while Emera’s U.S. operations would continue to be based in Tampa, Fla.
Emera president and CEO Scott Balfour would become CEO of the combined company. ATCO chair and CEO Nancy Southern would serve as co-chair of the board alongside current Emera chair Karen Sheriff.
The companies say the larger utility would have greater financial capacity to invest in electrification, natural gas and electric transmission, major industrial customers, export infrastructure and other large energy projects.
The combined company plans to carry out a $32-billion capital program through 2030 and is targeting average annual rate base growth of seven to eight per cent.
About 95 per cent of the combined company’s earnings are expected to come from regulated utilities, with roughly 80 per cent generated in Alberta and Florida.
Emera shareholders are expected to own about 60 per cent of the combined company, while Canadian Utilities shareholders would hold approximately 40 per cent.
Under the agreement, Emera will acquire all outstanding shares of Canadian Utilities and ATCO.
Canadian Utilities Class A shareholders, other than ATCO, would receive 0.755 Emera shares for each share held, while Class B shareholders would receive 0.819 Emera shares.
ATCO Class I and Class II shareholders would receive 0.865 Emera shares for each ATCO share they hold.
ATCO shareholders would also receive shares in a newly created company known as New ATCO, which would contain ATCO’s industrial services businesses.
New ATCO would focus on housing, defence and investments, including ports and retail energy. Southern would serve as its chair and CEO.
The companies say ATCO shareholders would therefore retain interests in both the combined Emera utility business and New ATCO.
ATCO’s controlling shareholder, Sentgraf Enterprises Ltd., has signed an agreement supporting the transaction.
The merger was approved by the boards of Emera, ATCO and Canadian Utilities following reviews that included independent special committees at ATCO and Canadian Utilities.
Until the transaction closes, all three companies will continue to operate independently.
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