Emera and Canadian Utilities (TSX:CU) have agreed to merge, creating a Canadian utility and energy infrastructure company with a pro forma enterprise value of about $72 billion, the companies said on Tuesday.
The deal values Canadian Utilities (TSX:CU) at approximately $14.3 billion and is expected to be the largest merger in history between two Canadian companies. The combined company will form a top 20 North American utility.
It will operate as Emera, with its public company headquarters in Halifax. It is expected to have about $45 billion in rate base and serve roughly six million customers across Canada, the United States and international markets. About 80% of earnings are expected to come from Florida and Alberta.
Under the all-share arrangement, Canadian Utilities Class A shareholders, other than ATCO (TSX:ACO.X) , will receive 0.755 of an Emera common share per share, while Class B shareholders will receive 0.819. ATCO Class I and Class II shareholders will receive 0.865 of an Emera share, plus one New ATCO share for each share held.
ATCO will spin off its industrial services business as New ATCO, a new public company focused on housing, defence and investments, including ports and retail energy.
Emera shareholders are expected to own about 60% of the combined company, with former ATCO and Canadian Utilities shareholders holding about 40%. The transaction is expected to be accretive to adjusted earnings per share in the first full year after closing.
Emera CEO Scott Balfour will lead the combined company.
"This merger creates a Canadian utility and energy infrastructure powerhouse with the scale, financial capacity and expertise to invest in the systems our customers will rely on for decades," Balfour said.
The combined company has a $32 billion capital plan through 2030, supporting expected average annual rate base growth of 7% to 8%.
