Emera bulks up for power demand boom with $10 billion Canadian Utilities deal (updated)
UPDATE 4-Emera bulks up for power demand boom with $10 billion Canadian Utilities deal Adds shares, details from conference call and background in paragraphs 3,6,7 and 12
By Katha Kalia
Oct 6 (Reuters) - Emera EMA.TO said on Tuesday it would buy peer Canadian Utilities CU.TO for C$14.3 billion ($10.02 billion) in stock, strengthening its financial muscle as power companies ramp up investments to tap into booming demand.
The deal, which will create one of Canada's top power providers with an enterprise value of about C$72 billion, comes when utilities across North America move ahead with costly upgrades of aging grid and transmission infrastructure.
"As demand rises from electrification trends and major infrastructure development, the combined company will be better positioned to help meet growing energy needs," Emera CEO Scott Balfour, who will lead the combined company, said in a statement.
US power firms NextEra Energy NEE.N and Dominion Energy D.N in May agreed to merge in a $66.8 billion deal amid soaring electricity demand fueled by the rapid expansion of data centers supporting the adoption of AI.
Emera said the deal would support a planned C$32 billion capital program through 2030, with an expected annual rate-base growth of 7% to 8%.
The combined company will have about 6 million customers and a presence in high-growth markets through a portfolio of 12 regulated utilities.
"Florida and Alberta will become the company's two largest jurisdictions, representing approximately 45% and 34% respectively," Balfour said in a conference call.
DEAL CLOSING IN 2027
Under the offer, Class A shareholders of Canadian Utilities, excluding ATCO ACOx.TO, will receive 0.755 Emera shares and Class B shareholders will get 0.819 for each share held.
The deal values Canadian Utilities' Class A shares at about C$51.57 each, a premium of roughly 0.7% to the stock's close on Monday, according to LSEG data.
Meanwhile, ATCO, which holds nearly 37% of the outstanding non-voting shares and all outstanding voting shares of Canadian Utilities, will separate into a publicly traded industrial services company.
Emera shares were down 1.2%, Canadian Utilities rose 1.4% and ATCO jumped 12.8% in morning trading.
The deal is expected to close in the third or fourth quarter of 2027 and add to earnings per share in the first full year following the completion.
The new company will operate as Emera and maintain its public company headquarters in Halifax.
($1 = 1.4270 Canadian dollars)
(Reporting by Katha Kalia in Bengaluru; Editing by Jonathan Ananda and Sriraj Kalluvila)