Emera bids for national powerhouse with $35-billion Canadian Utilities, ATCO merger

Halifax-based Emera Inc. EMA-T is bidding to build a national champion in the utility sector by merging with Calgary natural gas and electricity infrastructure owner Canadian Utilities Ltd. CU-T and parent ATCO Ltd. ACO-X-T in $35-billion union.

Emera, formerly a Nova Scotia Crown corporation, announced a friendly all-stock offer for Alberta peers controlled by the Southern family that would create one of the 20 largest utilities in North America. The combined companies would have an enterprise value – their debt plus equity – of $72-billion, which their executives said would rank as the largest merger in Canadian history.

“Our goal is to create a Canadian champion,” said Scott Balfour, Emera’s chief executive officer, in an interview. 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.

“Natural gas and electrical infrastructure define our industrial policy, and will power our future,” said Nancy Southern, 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.

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

The three companies have been in talks for 15 months and Mr. Balfour said Prime Minister Mark Carney’s campaign to attract up to $1-trillion in infrastructure investment encouraged all parties to strike a deal that created a domestic powerhouse. Emera’s CEO, a native of Oakville, Ont., said: “This is a moment for Canada.”

If shareholders and regulators approve the merger, current Emera shareholders would own 60 per cent of the combined company and Canadian Utilities and ATCO shareholders would own 40 per cent. The transaction is expected to close by the end of 2027.

If the deal is approved, Emera plans to spin out ATCO’s existing housing, defence and ports businesses into a new, publicly listed company, led by Ms. Southern and controlled by her family holding company, Sentgraf Enterprises Ltd. Ms. Southern 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.

Sentgraf would own approximately 7 per cent of Emera if the transaction is approved, making the Southern family’s company one of the largest institutional investors in the utility.

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.

Emera has a $21-billion market capitalization and said the deal values ATCO and Canadian Utilities’ shares at $14.3-billion, giving the merger an equity value of $35.3-billion.

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

The deal will see Ms. Southern join the Emera board as co-chair alongside Karen Sheriff, the current chair. Mr. Balfour will be CEO and the head office will remain in Halifax, while Canadian Utilities CEO Bob Myles will join the Emera executive team and continue to run operations in Alberta.

Mr. Balfour first pitched Ms. Southern on a merger over a lunch at the Calgary Stampede in 2025. The two met at the Ranchmen’s Club, a well-known business watering hole, and Ms. Southern said: “Scott asked me to lunch, yet I ended up paying.”

The two CEOs met at a time when large U.S. utilities were consolidating, in part to meet demands for investment in the electrical grids from data centre clients. In May, NextEra Energy Inc. and Dominion Energy Inc. announced a US$66.8-billion merger. In January, Constellation Energy Corp. closed a US$16.4-billion takeover of Calpine Corp.

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Ms. Southern said after Mr. Balfour’s initial approach 15 months ago, 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.

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.

BMO Capital Markets and Stikeman Elliott LLP worked for Canadian Utilities board’s special committee. CIBC Capital Markets and Norton Rose Fulbright Canada LLP advised ATCO’s special committee, and Felesky Flynn LLP provided Canadian tax counsel to the company.