ATCO Ltd. will spin off into a new publicly traded company made up of its housing, defence and investment businesses, including ports and retail energy, as part of a deal that folds its utility arm into Halifax-based Emera.

The companies announced the deal Oct. 6. Emera will acquire all the issued and outstanding shares of Canadian Utilities and ATCO, with ATCO's industrial services business spun out as New ATCO, which will include defence contractor ATCO Frontec.

New ATCO will keep its headquarters in Calgary, with Nancy Southern serving as chair and CEO and Katie Patrick as chief financial and investment officer.

ATCO says Frontec provides construction and operational support services for defence and security operations. The parent company pitched the standalone firm as a vehicle to pursue government investment in defence readiness, critical infrastructure and economic security through both organic growth and acquisitions.

Southern said the transaction "represents a defining next chapter for ATCO." She added that New ATCO would be positioned to accelerate growth in housing, defence and industrial services as economic growth, infrastructure expansion and a sharper focus on security and resilience create new opportunities.

Much of Frontec's defence work sits in the North. Last month, the company converted a remote site in Resolute Bay, Nunavut, into a temporary base capable of supporting 350 Canadian Armed Forces personnel during Operation NANOOK-NUNAKPUT, completing the job in three weeks. It also provides life-support services at Crystal City, DND's Arctic training facility in Resolute Bay.

In April 2025, a joint venture between ATCO Frontec and the Inuvialuit Development Corporation won a two-year, $48.4-million contract for radar defence work in the Northwest Territories under the Polar Over-the-Horizon Radar program, part of the federal plan to modernize NORAD.

Frontec also holds a 49 per cent stake in Nasittuq Corporation, a majority Inuit-owned company that operates and maintains the North Warning System and provides site support services at Canadian Forces Station Alert. The company also handles facility operations and maintenance at 15 DND sites in Alberta for Defence Construction Canada and supports NATO projects in Hungary, Bosnia and Herzegovina, and Kosovo.

ATCO shareholders will receive 0.865 of an Emera common share for each ATCO share, plus one New ATCO share for each ATCO share held. New ATCO will keep a dual-class structure, with all voting shares going to Sentgraf Enterprises Ltd. and non-voting shares distributed pro rata to existing ATCO non-voting shareholders.

Sentgraf, which holds all of ATCO's voting shares and about 27 per cent of its non-voting shares, has irrevocably agreed to vote in favour of the transaction.

The combined Emera will have a pro forma enterprise value of about $72 billion, roughly $45 billion in rate base and some six million customers. Based on Canadian Utilities' implied enterprise value of $28 billion, the companies say it will be the largest merger in history between two Canadian companies.

Emera CEO Scott Balfour will lead the combined company, which will keep its public company headquarters in Halifax. Southern will serve as co-chair of the Emera board alongside current chair Karen Sheriff.

Security holders of all three companies are expected to vote at special meetings in early 2027. The deal requires court, regulatory and stock exchange approvals, including review under the Competition Act and by the Committee on Foreign Investment in the United States, and is expected to close in the third or fourth quarter of 2027.

Until closing, Emera, ATCO and Canadian Utilities will continue to operate independently. New ATCO is being incorporated in Alberta and will remain an Alberta company headquartered in Calgary.