Shares of Calgary-based Canadian Hydro Developers (TSX: T.KHD, Stock Forum) surged 33% to $4.88 Monday, after TransAlta Corporation (TSX: T.TA, Stock Forum) said that it intends to make an all-cash offer to acquire the company for $4.55 per share.
The proposed transaction has an enterprise value of approximately $1.5 billion.
TransAlta first approached Canadian Hydro Developers in December with the aim of reaching a negotiated transaction, but says that “despite TransAlta's efforts, it became clear that a negotiated transaction could not be achieved.”
“As a result, TransAlta felt compelled to make this offer directly to Canadian Hydro Developers' shareholders,” says the company.
Canadian Hydro Developers operates 694 megawatts of wind, hydro and biomass facilities in Alberta, Ontario, Quebec and British Columbia, and has 252 MW of advanced-stage development projects in western and eastern Canada.
On a combined basis, TransAlta and Canadian Hydro Developers would have net generation capacity of 8,657 MW in operation.
TransAlta shares were down 1.2% to $20.76 Monday.
"For TransAlta, this transaction accelerates our current strategy and extends our leadership position to become the largest publicly traded provider of renewable energy in Canada," said Steve Snyder, TransAlta's CEO. "We believe the combination of Canadian Hydro Developers' portfolio and our operational and development capabilities and strong balance sheet, creates a company well-positioned to succeed in a world in which both capital and carbon are constrained," he added.
On the company’s Bullboard, redcoats said: “This offer will attract many other sharks. Don't let it go so cheap. Look at the long term chart. Canadian Hydro is down only just due to the current short term economic malaise. The share price hasn't even had a normalized market evaluation for the greatly increased capacity that has been added over the last year, to say nothing of the type of it's capacity[sic].”
