The board of Canadian Hydro Developers Inc. issued a statement July 23, 2009, soundly rejecting a takeover bid by wholesale power producer TransAlta Corp.
TransAlta formally launched a takeover bid July 22, offering to buy the hydro and wind developer for C$4.55 (US$4.13) a share. (HydroWorld 7/23/09) The unsolicited cash offer represented a 24.6 percent premium over CHD's closing price July 17 of C$3.65 (US$3.32) a share. The attempted takeover comes after both companies failed to reach a deal earlier this year.
"This offer is inadequate and its timing is purely opportunistic," CHD Chief Executive Officer Kent Brown said. "We're at a key inflection point in our company's 20-year history as we begin to reap the financial rewards of our significant development investments."
The CHD Board of Directors unanimously recommended that shareholders reject the offer as it substantially undervalues CHD. CHD said the timing of the offer is opportunistic because CHD has doubled in size in the last eight months, having brought the 132-MW Melancthon II and 198-MW Wolfe Island wind projects on line.
TransAlta Chief Executive Officer Steve 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.
"The price we are offering represents a compelling value for Canadian Hydro Developers' shareholders and compares favorably to precedent and recent transactions," Snyder said. "Absent this offer, we believe they face significant uncertainty in today's environment."
CHD shareholders have until Aug. 27 to accept or reject the offer.
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)