TransAlta launches takeover bid for Canadian Hydro Developers

Wholesale power producer TransAlta Corp. formally launched a takeover bid July 22, 2009, seeking control of renewable energy producer Canadian Hydro Developers Inc.

CHD advised shareholders to make no response to the uninvited overture until they receive further guidance from the CHD Board of Directors. The attempted takeover comes after both companies failed to reach a deal earlier this year.

CHD shares surged more than 30 percent after word July 20 that TransAlta was offering to buy the hydro and wind developer for C$4.55 (US$4.13) a share. The unsolicited cash offer represents a 24.6 percent premium over CHD’s closing price July 17 of C$3.65 (US$3.32) a share.

“The price we are offering represents a compelling value for Canadian Hydro Developers’ shareholders and compares favorably to precedent and recent transactions,” TransAlta Chief Executive Officer Steve Snyder said. “Absent this offer, we believe they face significant uncertainty in today’s environment.”

Snyder said acquiring CHD would make it the largest publicly traded provider of renewable energy in Canada. He said the company would be well-positioned for a world in which both capital and carbon emissions are constrained.

Snyder said the CHD board rejected a similar offer previously.

CHD, which has until Aug. 27 to accept or reject the offer, has established a special committee to review the overture. The committee “will recommend to the board the course of action that is in the best interests of Canadian Hydro and its shareholders,” CHD Chief Executive Officer Kent Brown said.

CHD operates 21 renewable energy plants totaling 694 MW of installed capacity. It has another 185 MW in or near construction, and 1,600 MW in development, including hydro, wind, and biomass.

The developer is in the permitting stages to develop the 100-MW Dunvegan hydroelectric project near Dunvegan Bridge in Alberta’s Fairview District. The C$500 million (US$410 million) project is expected to generate 600 gigawatt-hours annually. (HydroWorld 1/5/09)

CHD also began construction in 2008 of the 9.9-MW Clemina Creek and 20-MW Bone Creek projects, both near Blue River, British Columbia. The developer proposes a third hydro project nearby, 9.6-MW Serpentine Creek. CHD said all three are expected to be completed in spring 2010. (HydroWorld 8/8/08)