Canadian Utilities, Emera Strike C$72B Utility Merger Deal

Key Points

• Emera and Canadian Utilities agreed to a predominantly all-share merger that would create a utility and energy infrastructure company with an estimated C$72 billion enterprise value, C$45 billion rate base and roughly 6 million customers. The deal is targeted to close in late 2027, pending shareholder and regulatory approvals.
• Emera shareholders are expected to own about 60% of the combined company, while Canadian Utilities and ATCO shareholders would hold the remaining 40%. The combined company expects about 95% of 2026 earnings to come from regulated operations, with major growth exposure to Florida and Alberta.
• The companies project 7% to 8% annual rate-base growth through 2030, while Emera will maintain its 1% to 2% dividend-growth target. Canadian Utilities shareholders are expected to receive a 20% dividend increase, and local utility operations and headquarters in Halifax and Calgary will remain in place.

Emera and Canadian Utilities TSE: CU have agreed to combine in a predominantly all-share transaction that the companies said would create a Canadian-headquartered, top-20 North American regulated utility and energy infrastructure company.

The companies expect the transaction to close in late 2027, subject to shareholder approvals, regulatory approvals and other customary closing conditions. Emera shareholders are expected to own about 60% of the combined company, while Canadian Utilities and ATCO shareholders combined are expected to own the remaining 40%.

Under the proposed structure, Canadian Utilities shareholders will receive Emera voting shares based on fixed exchange ratios detailed in the companies’ transaction materials. ATCO shareholders will receive shares in both Emera and a new ATCO entity. The combined public company will continue as Emera and retain its listings on the Toronto Stock Exchange and New York Stock Exchange.

Scale, regulated operations and growth markets

Emera President and CEO Scott Balfour said the merger would create a larger platform to fund infrastructure needed for electrification, industrial development, energy security, data centers and growing customer demand.

The combined company is expected to have an enterprise value of about C$72 billion, approximately C$45 billion in rate base and roughly 6 million customers across 12 regulated utilities. About 95% of expected 2026 earnings are projected to come from regulated operations, according to the companies.

The companies said approximately 80% of adjusted earnings would be generated in Florida and Alberta, while roughly 70% of the combined rate base would be invested in electric and natural gas transmission and distribution infrastructure. Florida and Alberta are expected to represent about 45% and 34%, respectively, of the combined rate base, meaning no single jurisdiction would account for more than half.

Balfour said the combination is expected to support 7% to 8% annual rate-base growth through 2030. Emera maintained its long-term guidance for adjusted earnings-per-share growth of 5% to 7% and dividend growth of 1% to 2%.

Canadian Utilities CEO Bob Myles said the transaction would provide geographic diversification and additional financial capacity as Canadian Utilities pursues a growing capital plan. Canadian Utilities’ rate base is forecast to increase from about C$15.1 billion in 2025 to C$21.4 billion by 2030, the companies said.

Myles said approximately 95% of Canadian Utilities’ 2026-2030 capital program is directed to Alberta. He cited demand from population growth, industrial investment, oil and gas activity, electrification and new large-load infrastructure as key drivers of future investment in the province.

Dividend and financial expectations

Emera said the share-based structure is intended to minimize financing execution risk while preserving the balance-sheet strength of both companies. The company expects the deal to be accretive to earnings per share in the first full year after closing and to improve credit-rating thresholds.

Jared Green, Emera’s chief financial officer, said the combination would create a more diversified and lower-risk overall credit profile. He said the company would continue to seek cushion in its credit metrics and retain its focus on investment-grade credit ratings and a stable outlook.

Emera plans to maintain its current dividend policy and target dividend growth of 1% to 2%, while improving its payout ratio. Canadian Utilities shareholders are expected to receive a 20% dividend increase, and Canadian Utilities shareholders are also expected to benefit from the adoption of Emera’s quarterly dividend, subject to final terms and closing.

Local operations and leadership

The companies emphasized that the merger is not intended to centralize local utility operations. Local management, customer service, regulatory engagement and investment decisions will remain within the jurisdictions served, they said.

The combined company’s public-company headquarters will remain in Halifax. Canadian Utilities’ corporate and operational headquarters will remain in Calgary, with continued operations in Edmonton and Perth, while Emera’s U.S. operations will remain headquartered in Tampa.

Balfour will remain president and CEO of the combined company, and Green will continue as CFO. Myles will become a senior executive at Emera while continuing as CEO of Canadian Utilities and reporting to Balfour. Becky Penrice will join Emera’s leadership team as executive vice president of corporate transformation and integration.

The combined company will have a 13-member board, with seven directors from Emera’s current board and six put forward by Canadian Utilities. Nancy Southern will serve as co-chair alongside Emera Chair Karen Sheriff.

During the question-and-answer session, Balfour said the transaction’s primary rationale was growth rather than cost synergies. He said the companies may identify benefits in areas such as supply chains, purchasing power and insurance costs, but described the central aim as expanding capacity to invest in infrastructure. Both companies said they would continue to evaluate regulated and contracted, non-regulated opportunities based on financial merit.

About Canadian Utilities (TSE:CU)

Canadian Utilities Ltd, a subsidiary of holding company Atco, offers gas and electricity services. The company's main divisions include electricity (generation, transmission, and distribution), pipelines & liquid (natural gas and water), and Retail Energy. Headquartered in Calgary, Alberta, the firm mainly operates in Canada and Australia, along with some operations in the United States and Mexico. Canadian Utilities launched a large venture called Atco Energy, which provides low-cost and sustainable energy solutions for Alberta.

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