The Globe and Mail reports in its Thursday, Oct. 8, edition that the recent $14.3-billion merger between Emera and Canadian Utilities raises a key question: Is bigger better? The Globe's Tim Kiladze and Matthew McClearn write that company leaders promote the merger as beneficial for the country. However, the actual benefits remain unclear.
One argument is that, on their own, neither is large enough to pay for the massive infrastructure investments utilities face in the years ahead. At the same time, United Sgttes companies are getting bigger by merging. If Emera and Canadian Utilities are left standing all alone, they might be minnows in a hyper-concentrated industry.
U.S. power mergers, though, are starting to face political backlash, which means they might not get approved, or major concessions might be needed to get the green light. And Emera and Canadian Utilities largely operate in very different places -- Florida and Alberta. Merging will diversify their revenue mix, but there is little to no overlap between their operations, so they can't learn all that much from one another or share resources.
Their geographies also complicate cost savings, something both companies were up front about.
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