The Successful Investor Hotline – Friday, August 21, 2009

Article Excerpt

TRANSALTA CORP., $22.73, Toronto symbol TA, received approval from competition regulators this week for its proposed takeover of Canadian Hydro Developers Inc. (Toronto symbol KHD). Canadian Hydro owns and operates 21 power-generating facilities in Alberta, B.C., Ontario and Quebec. These include 12 hydroelectric plants, eight wind farms and one biomass plant, which generates power by burning plant materials and wood waste from lumber mills. Last month, TransAlta launched a hostile takeover bid for Canadian Hydro. The offer is worth $4.55 a share, for a total of $654 million. (That’s equal to 79% of TransAlta’s 2008 cash flow of $828 million, or $4.16 a share.) Buying Canadian Hydro would lower TransAlta’s reliance on power from non-renewable sources, such as coal and natural gas. It would also help TransAlta comply with the tougher new environmental regulations that will likely come into effect over the next few years. So far, Canadian Hydro has resisted the bid, and is looking for a new buyer. Canadian Hydro’s investors…

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