Emera’s Power Move Will Build AI and Energy Infrastructure

Earlier this month, Emera and Canadian Utilities announced a merger of equals in an all-stock transaction expected to close in 2027.

Many of our clients have held shares in both Emera and Canadian Utilities for years. Under the terms of the deal, existing Emera shareholders will own approximately 60% of the combined entity, while Canadian Utilities shareholders will own 40%. Given our positive view of the transaction, we intend to maintain our core positions, buy Emera shares for new clients, and rebalance existing accounts only when necessary to manage the portfolio risk of owning both stocks. 

The deal gives the combined entity significantly greater balance sheet scale to fund major infrastructure projects. These include powering data centers, expanding natural gas pipelines, and integrating provincial electrical grids. With an enterprise value of $72 billion (the combined total of debt and equity), this marks the largest merger between two Canadian companies in history and creates one of North America’s top twenty utility providers.

Supported by $32 billion in planned capital investments through 2030, the new company is targeted to grow earnings per share by 5% to 7% annually. Approximately 95% of earnings will stem from low-risk regulated utilities, with 80% anchored in Florida and Alberta. In total, the business will supply power and energy to roughly 6 million customers across Canada, the U.S., and internationally.

For clients holding both Emera and Canadian Utilities, we will actively manage the combined position size. Because each client portfolio is individually customized, any time a single stock weight approaches high single digits, we rebalance to control concentration risk. Under the terms of the all-stock transaction, Canadian Utilities shareholders will receive 0.755 Emera shares for each CU share held. As a result, both stocks will trade with high correlation until the deal closes. Any portfolio adjustments you notice around these tickers will be purely risk-management rebalancing rather than a shift in our view of the transaction.

Exponential growth in artificial intelligence, data center capacity, and industrial electrification is driving the largest surge in North American electricity demand in decades. The new Emera provides the balance sheet scale and multi-billion-dollar investment pipeline necessary to build the essential power infrastructure that supports this expansion.

(Disclosure: Sunni Schneider and Jeff Pollock have a financial interest in Emera and Canadian Utilities as shareholders. No compensation was received to publish this content.) 

-written by Jeff Pollock