Score one for Canadian Hydro Developers (CHDVF.PK) in its takeover battle with TransAlta (TAC), as the Alberta Securities Commission gives the utility more time to find an offer that beats its rival’s hostile bid.
Alberta’s market watchdog ruled against TransAlta’s attempt to strike down Canadian Hydro’s poison pill. Among other features, that shareholders’ right plan gives Canadian Hydro 60 days to scare up a better offer - a fairly standard provision when a company is in play.
TransAlta’s $4.55-a-share bid is scheduled to expire on Monday, Aug. 31, which is 36 days after it was launched.
To date, Canadian Hydro has spurned TransAlta, arguing its collection of wind farms and hydroelectric projects is worth more than its rival is offering. The market agrees, as Canadian Hydro has consistently traded above $5 since the bid was launched.
But no other bidder has stepped up, and TransAlta hasn’t budged on price or timing. Now, the bidder will be forced to extend its offer, or simply walk away, which seems unlikely.
“We believe that the Alberta Securities Commission’s ruling is positive for Canadian Hydro,” said analyst Michael McGowan at BMO Nesbitt Burns in a report Wednesday. “It allows the company additional time to solicit offers, thereby increasing the price that all potential acquires (including TransAlta) would need to pay in order to successfully purchase Canadian Hydro.”