Canadian Hydro’s poison pill can stand

Canadian regulators have denied TransAlta Corp.’s request to throw out Canadian Hydro’s shareholder rights plan, a poison pill meant to thwart TransAlta’s attempted takeover of the company.

TransAlta made an unsolicited offer of C$4.55 (US$4.13) a share for Canadian Hydro, which has 694 MW of renewable capacity (water, wind, and biomass). The company also has 160 MW of renewable capacity nearing construction and 1,660 MW in development.

Shareholder rights plans typically flood the market with new shares of the company, making an acquisition by a hostile bidder prohibitively expensive.

The ruling by the Alberta Securities Commission “is the best possible outcome for our shareholders,” said Dennis Erker, chairman of Canadian Hydro. “The TransAlta offer is not in the best interests of Canadian Hydro or our shareholders, and we are actively pursuing a full range of alternatives to generate superior value.”

Canadian Hydro has said the TransAlta offer is “inadequate” because it does not reflect the company’s current value or the value of future projects. The company is pursuing better offers. (HydroWorld 8/17/09)

“Superior proposals delivering greater value for shareholders may emerge,” the company said in a statement.

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