Outside Canadian Utilities holders would get about 0.7% over Monday in a C$14.3 billion deal

Emera agreed on Tuesday to buy Canadian Utilities and ATCO, the company that controls it, and to pay in shares rather than cash.

For Class A holders other than ATCO, that stock was worth 0.7% more than Monday's close. That figure is our calculation at Monday's Toronto closes, not a premium the companies stated.

Those holders would receive 0.755 of an Emera share for each share they own. At Monday's close of C$68.30, the last price before the announcement, that was worth C$51.57. The Class A shares closed the same day at C$51.20.

ATCO owns about 37% of the Class A shares, and all of the voting shares, and it has agreed to vote for the deal and against a competing proposal. Class A shares do not normally carry a vote, but they do on this deal, and approval needs two-thirds of the votes cast.

Holders must also approve by a majority of the Class A votes that remain after leaving out the votes Multilateral Instrument 61-101 requires to be excluded. That is the Canadian rule for protecting minority holders in a deal like this.

The companies project about 20% more dividend income for those Class A holders. The size and timing of any dividend after the close would still be up to Emera's board.

What each holder is offered

The companies called it a merger of equals. Emera is the buyer. It would keep the name, and its shares would keep trading in Toronto and New York. Emera's existing shareholders would own about 60% of the combined company. Former ATCO and Canadian Utilities holders would own about 40%.

They value the whole combination at about C$72 billion, or US$50.46 billion. That figure adds the combined stock-market value to net debt and preferred shares, so it is not a cash price. The Canadian Utilities shares being acquired are the part valued at about C$14.3 billion, paid in Emera stock.

They called it the largest merger in Canadian history. That claim uses an implied value of about C$28 billion for Canadian Utilities, on the same debt-inclusive measure, not the C$72 billion for the whole group.

Emera holders would be asked to approve the new shares by a simple majority. Emera said the deal should add to its adjusted earnings per share in the first full year after closing, and that it expects to keep its investment-grade credit ratings.

ATCO holders get Emera stock plus a share no one can price yet. Each ATCO share would bring 0.865 of an Emera share, worth C$59.08 at Monday's Emera close, and one share in New ATCO, a new Calgary company that does not trade.

New ATCO would take the businesses that are not the regulated utility, including housing, defense, ports and retail energy. Canadian Utilities holders other than ATCO would not receive those shares.

Sentgraf Enterprises owns all of ATCO's voting shares and about 27% of its non-voting shares, and it has agreed to vote for the deal. Sentgraf would receive all of New ATCO's voting shares. Other ATCO holders would receive non-voting shares.

ATCO holders must still approve the deal by two-thirds of the votes cast.

Scott Balfour would stay as chief executive. Nancy Southern, ATCO's chair and chief executive, and Karen Sheriff, Emera's chair, would be co-chairs of a 13-member board, seven seats from Emera and six from Canadian Utilities. Southern would also lead New ATCO.

Emera owns Tampa Electric and Peoples Gas in Florida, and the companies said about 70% of its earnings already come from operations there. The combined company would serve about six million customers, against about 2.1 million Emera says it serves now.

The companies put the rate base, the plants and pipes regulators use when they set a utility's allowed profit, at about C$45 billion, using 2025 figures. They said about 95% of earnings would come from regulated utilities, and about 80% from Florida and Alberta. The public headquarters would stay in Halifax, with the US business still based in Tampa.

Who still has to say yes

Closing needs the Court of King's Bench of Alberta, the Alberta Utilities Commission, and, if required, the Northwest Territories Public Utilities Board. In the United States it needs the Federal Energy Regulatory Commission, the Federal Communications Commission, a review by the Committee on Foreign Investment in the United States, and a Hart-Scott-Rodino antitrust review.

It also needs approvals or notices under Canada's Competition Act and Canada Transportation Act, a review by Mexico's competition authority, and reviews under Australia's foreign-investment and competition laws. The Toronto Stock Exchange and the New York Stock Exchange must approve as well. The companies expect to close in the third or fourth quarter of 2027 if those approvals come.

A yes from the block ATCO has pledged does not finish the shareholder votes. The other Class A holders still have to decide whether to accept about 0.7% over Monday's close.