Retail Supplier To Be Spun Off Under Merger Of Two Utility Parents (Utilities Have Choice Programs)

Emera, ATCO, and Canadian Utilities today announced a definitive agreement to bring together Emera and Canadian Utilities in a "merger of equals".

The new company will operate as Emera.

In connection with the transaction, ATCO will spin off its retail energy business active in Alberta (ATCO Energy), along with various other ATCO businesses, into New ATCO, focused on housing, defence, and investments, including ports and retail energy

"New ATCO will emerge as a purpose-built company with dedicated leadership, capital and strategic focus, positioned to build, deploy and operate in complex environments across North America and international markets," the companies said

At New ATCO, current ATCO Chair and CEO Nancy Southern will serve as Chair and CEO of the new entity New ATCO. Katie Patrick will serve as Chief Financial & Investment Officer at New ATCO

In Alberta, ATCO ultimately owns distribution utility ATCO Electric, which offers electric choice to all customer classes

In Florida, Emera owns People's Gas, which has a customer choice program open to residential and non-residential customers

The merger will be carried out through an acquisition by Emera of all the outstanding shares of Canadian Utilities, valued at approximately $14.3 billion. The transaction is structured as an all-share transaction

Under the terms of the agreement, Emera will acquire all the issued and outstanding shares of Canadian Utilities and ATCO, and the transaction will be structured such that ATCO’s industrial services business will be spun-out as New ATCO. Emera will acquire all of the issued and outstanding shares of Canadian Utilities and ATCO for the following consideration:

Canadian Utilities Class A shareholders, other than ATCO, will receive 0.755x of an Emera common share for each Canadian Utilities Class A share held;

Canadian Utilities Class B shareholders, other than ATCO, will receive 0.819x of an Emera common share for each Canadian Utilities Class B share held;

ATCO Class I and Class II shareholders will receive 0.865x of an Emera common share for each Class I or Class II share held. This exchange ratio reflects (i) the same 0.755x exchange ratio for the Canadian Utilities Class A shares held by ATCO; and (ii) the same 0.819x exchange ratio for the Canadian Utilities Class B shares held by ATCO, as adjusted for certain liabilities assumed by Emera and the value of certain Emera shares that will be issued to New ATCO as part of the spinoff transaction.

In addition to the Emera shares, ATCO shareholders will also receive one New ATCO Class I share for each ATCO Class I share held and one New ATCO Class II share for each ATCO Class II share held. All of the voting shares of New ATCO will be distributed to ATCO's sole Class II voting shareholder, Sentgraf, while the non-voting shares of New ATCO will be distributed to existing ATCO Class I non-voting shareholders on a pro rata basis.

Following completion of the transaction, existing Emera shareholders are expected to collectively own approximately 60% of the combined company, while former ATCO and Canadian Utilities shareholders are expected to collectively own approximately 40%.

Completion of the transaction is subject to the satisfaction of customary conditions, including applicable shareholder, court and regulatory approvals. The transaction is expected to close in the third or fourth quarter of 2027, the companies said