After 11 weeks and four bid extensions, TransAlta, the power plant owner based in Calgary, finally lined up a friendly deal to buy Canada's largest wind power producer, Canadian Hydro Developers, with an improved offer to the renewable energy developer's shareholders. TransAlta says that it will make the combined entity a North American leader in renewables.
TransAlta will now pay C$5.25 per share, up from its original offer of C$4.55. With 143.7 million shares outstanding, the bid amounts to just under C$755 million in cash. When debt and other financial items are factored in, the total value of the deal is now C$1.6 billion.
As Windpower Monthly went to press, TransAlta announced that it had acquired 87% of Canadian Hydro stock and was extending its offer to buy the remaining shares to November 3. The deal had the unanimous support from the boards of both companies.
"Over the past two months, the Canadian Hydro board and its advisors have conducted a thorough process to review and consider the full range of options, including alternative proposals," says Dennis Erker, chair of the Canadian Hydro board. "We believe the revised offer from TransAlta provides our shareholders with a premium and liquidity, and we are encouraging our shareholders to accept."
Canadian Hydro rejected TransAlta's original offer, which was made in July, as inadequate and actively sought competing bids. By late September it was able to announce that it had multiple offers from unidentified suitors and that TransAlta no longer had the leading proposal.
TransAlta targeted Canadian Hydro in its drive to accelerate the expansion of its renewable energy business. The combined entity's project pipeline and strong balance sheet will position it to become a North American leader in renewable energy, TransAlta CEO Steve Snyder said when unveiling the offer.
TransAlta shares gained three cents to C$21.15 in trading on the Toronto Stock Exchange the day the deal was announced. Shares of Canadian Hydro Developers rose by 22 cents to close at C$5.23 per share.
The acquisition will boost the renewables portion of TransAlta's generating portfolio from 15% to 22%, says Snyder. It would also nearly double TransAlta's wind development pipeline to 2.6 GW, with 404 MW of that at an advanced stage.
TransAlta currently has 7.9 GW of generating capacity, mostly coal and natural gas. Canadian Hydro's operating portfolio of 694 MW is all renewables, 84% of which is wind.