ATCO Unveils Spin-Off Plan as Canadian Utilities Merges With Emera

Key Points

• ATCO plans to separate its non-utility businesses—including Structures, Frontec, housing, defence and investments—into a newly listed company that will retain the ATCO name, while Canadian Utilities merges with Emera under the Emera brand.
• Under the proposed transaction, ATCO shareholders would receive 0.865 Emera shares and one new ATCO share for each existing ATCO share, providing exposure to both the enlarged utility and the focused industrial-services business.
• The standalone ATCO is expected to begin with more than C$700 million in cash and no corporate debt; management sees growth opportunities in modular housing, defence, Arctic infrastructure and logistics.

ATCO TSE: ACO.X outlined its plans to separate its industrial services and investment businesses into a newly listed public company while Canadian Utilities combines with Emera in a proposed merger of equals.

Under the proposed arrangement, Emera would acquire all outstanding ATCO shares and publicly traded Canadian Utilities shares not already held by ATCO. ATCO’s housing, defence and industrial businesses would then be spun off into a separate publicly traded company retaining the ATCO name.

ATCO Chair and Chief Executive Officer Nancy Southern said the transaction is intended to give both businesses clearer strategic priorities. The combined utility would operate under the Emera name, while the new ATCO would focus on industrial services, housing, defence and investment holdings.

“Today’s agreement has two equally important outcomes,” Southern said. “It brings Canadian Utilities and Emera together in a merger of equals” while opening “an exciting new chapter for ATCO” as a focused industrial services company.

Shareholders Would Hold Two Investments

At closing, existing ATCO shareholders would receive 0.865 of an Emera common share and one share in the newly separated ATCO for each existing ATCO share. Southern said the structure would give shareholders exposure both to a larger utility and energy infrastructure company and to ATCO’s non-utility operations.

The combined Emera business is expected to have approximately C$45 billion in rate base, with operations in Alberta, Florida, Australia, the Caribbean and Puerto Rico. Southern said ATCO shareholders would continue to participate in Canadian Utilities’ future through the Emera shares received in the transaction.

Based on the announced terms, Southern said shareholders would receive approximately 20% higher dividend income through their Emera shares, in addition to any dividend approved by the new ATCO board after closing. Katie Patrick, ATCO’s executive vice president and chief financial and investment officer, said the company intends to remain a dividend-paying business, subject to board approval.

Southern said the utility combination reflects the growing importance of scale in energy infrastructure, including investments tied to electrification, data centers, natural gas distribution and potential large-scale projects. She said scale could help the combined company compete for infrastructure opportunities through supply-chain capabilities, customer relationships and financial capacity.

New ATCO to Center on Structures, Frontec and Investments

Following the separation, ATCO would operate across three core areas:

• ATCO Structures, which provides space rentals, workforce housing and permanent modular construction.
• ATCO Frontec, which provides remote logistics, facility operations, emergency response and mission-critical support for defence and government customers.
• Investment businesses, including a 40% interest in Neltume Ports, ATCO Land and Development, and retail energy provider ATCO Energy.

Patrick said the businesses outside Canadian Utilities generated approximately C$1.5 billion in revenue and C$173 million in adjusted earnings in 2025. Adjusted earnings rose from C$72 million in 2021, representing a compound annual growth rate of about 25%, according to the company.

Structures generated C$274 million in adjusted EBITDA in 2025 and has delivered 16 consecutive quarters of year-over-year earnings growth, Patrick said. The business operates 44 branches and 13 manufacturing sites across five countries.

Patrick said ATCO sees a potential valuation opportunity from the separation because its non-utility businesses have historically been assessed largely through the company’s Canadian Utilities ownership. Applying the peer multiple referenced in ATCO’s presentation to Structures’ trailing earnings would imply about C$2.4 billion in value for that business, compared with C$1.1 billion in implied market value for all businesses outside Canadian Utilities, she said. Patrick cautioned that the potential valuation outcome is not guaranteed.

Housing, Defence and Arctic Opportunities

Southern identified affordable housing, workforce accommodation, defence readiness and Arctic infrastructure as areas of opportunity for the new ATCO. She said the company’s factory-built modular approach has demonstrated the ability to complete comparable projects three times faster than conventional wood-frame construction.

In defence, ATCO Frontec has a 42-year history of serving government and defence clients, including work related to NORAD modernization, the A-OTHR radar system, NATO operations and a U.S. Navy worldwide expeditionary contract, Patrick said.

Southern cited anticipated defence and infrastructure activity in Canada’s Arctic, including possible requirements for training camps, workforce housing, hangars and support infrastructure. She also discussed potential activity in Europe, particularly Poland and Lithuania, as governments consider defence accommodation, logistics and related infrastructure needs.

The company is also pursuing port-related opportunities, Southern said, including commissioning a new port in Washington state, projects in Brazil and the proposed Grays Bay Road and Port project in the Arctic.

Capital Position and Leadership

ATCO expects to begin as a standalone company with more than C$700 million in cash, no corporate debt and access to capital, Southern and Patrick said. Patrick said the company has considered liquidity needs and financing options for future expansion.

Southern will remain chair and chief executive officer following completion of the separation. She said ATCO’s established customer relationships, operating capabilities and experience in remote and complex environments would provide the foundation for the new company’s growth strategy.

“A more focused company gives us the opportunity to pursue those needs with a clear strategy,” Southern said, referring to housing, defence, logistics and infrastructure demand.

About ATCO (TSE:ACO.X)

As a global enterprise, ATCO Ltd. and its subsidiary and affiliate companies have approximately 20,000 employees and assets of $28 billion. ATCO is focused on delivering essential solutions across the housing, energy and defence sectors, helping build, power and protect a future everyone can count on. ATCO Structures delivers innovative modular solutions that help communities address growing housing demand while supporting industry and economic growth. Canadian Utilities, an ATCO subsidiary, delivers safe and reliable energy services through its utilities, midstream and generation businesses.

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