Emera has agreed to acquire Canadian Utilities in an all-share merger of equals, turning the steady Alberta-based utility into the center of a planned Canadian energy heavyweight. Canadian Utilities now trades at CA$49.85, with the share price easing over the past quarter even as the year-to-date share price return of 16.5% sits against a much stronger 1-year total shareholder return of 33.8% and a 3-year total shareholder return above 90%. The stock carries a price-to-sales multiple of 3.6x against CA$3,761.0m in revenue, well above the estimated fair P/S ratio of 2.7x, the 1.6x for the global integrated utilities industry and 1.7x for its immediate peer group, while a CA$538.0m non-recurring loss left net margins at 1.2% versus 12% a year earlier. A discounted cash flow model flags the shares as trading 64.1% below an estimated future cash flow value of CA$139, and the dividend yield of 3.71% is not fully backed by current profits, though forecasts call for 42.1% annual earnings growth and 4.3% revenue growth. Sentiment could shift quickly if the Emera merger timetable slips or regulators attach conditions that weaken the appeal of the all-share tie-up.
Emera IncorporatedEmera agreed to acquire Canadian Utilities in an all-share merger of equals, a major M&A event for Emera.
