CALGARY -- Two U.S. private equity firms are offering about $7.8 billion -- or $39 a share in cash -- for Alberta-based utility TransAlta Corp. (TSX:TA), which had been under pressure by a major investor to boost its stock price.
LS Power Equity Partners and Global Infrastructure Partners presented TransAlta with a "non-binding approach" on Monday.
TransAlta said its board will "carefully consider the letter and will respond in due course."
LS Power Equity Partners is linked to Luminus Management LLC, the New-York based hedge fund that fought earlier this year to persuade TransAlta to shed assets and to load up on debt as a means to buy back shares.
LS Power president James Bartlett said in a telephone interview that the suitors are seeking a "consensual, negotiated transaction."
The proposal Monday is a premium of 21 per cent over TransAlta's TSX price Friday of $32.25, with a 52-week range between $37.60 and $27.07.
TransAlta shares jumped as high as $38.10 after Monday morning's news, but closed at $37.11, up $4.86 or 15 per cent.
LS Power Equity Partners and Luminus, closely related to Houston-based Dynegy Inc. (TSX:DYN), together already own a nine per cent stake in TransAlta.
Global Infrastructure Partners is a joint venture of Credit Suisse (NYSE:CS) and General Electric Co. (NYSE:GE).
Talks with TransAlta have gone on for "a relatively long period of time," including discussions in recent days, said Bartlett, a former Credit Suisse managing director who sits on the Dynegy board.
"LS Power and Global Infrastructure Partners, as informed power-sector investors, have a long-term-investor point of view and we want to support the company," he added.
"We also very much think (TransAlta CEO) Steve Snyder is doing a good job. We're committed to retaining the current CEO and management."
TransAlta's head office would remain in Alberta, he said, and it would remain "business as usual" for power consumers in the province.
"We, by the nature of being a private company versus a public stockholder, aren't worried about quarter-to-quarter earnings targets, and we think that's frankly the best way to support the company and give it the flexibility to invest and execute over the long term," Bartlett said.
Dealing with the heavily coal-dependent generator's environmental sustainability would be a key issue, Bartlett said.
"We believe in developing sources of renewable energy, greenhouse gas solutions. And as well, like TransAlta, we believe that it's important to identify sustainable ways to increase generation capacity."
Bartlett did not specify how ownership of TransAlta would be split between LS Power and Global Infrastructure Partners, but the two "are straight-up partners in the transaction," he said.
-- The Canadian Press
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