TransAlta, the leading Canadian wind power generator, has announced its plans to acquire all outstanding shares of TransAlta Renewables (RNW), in a move that will bring RNW fully under its ownership. The acquisition will involve TransAlta paying a premium of 13 Canadian dollars ($9.79) per share or offering 1.0337 TransAlta shares for each RNW share.
This merger aims to create a united, publicly traded entity that will simplify governance and provide a clear roadmap for executing a clean-electricity growth plan. By combining forces, the two companies anticipate enhanced diversification, increased public float, and greater trading liquidity.
One of the key motivations behind this merger is to mitigate risks associated with maintaining RNW’s current dividend level. Factors such as near-term contract expiries and cash tax increases pose significant challenges to RNW’s cash reserves. However, the merger with TransAlta is expected to address these concerns and provide stability.
The offer of C$13.00 per share represents an attractive 18.3% premium over Monday’s closing price of C$10.99. While RNW’s stock has experienced a decline of approximately 2.3% year-to-date, this merger presents an opportunity for future growth.
The total consideration for RNW shareholders is estimated at C$1.38 billion, with C$800 million to be paid in cash. This merger comes with the commitment to align both companies under a single strategy that will offer greater transparency and further support growth initiatives.
A special committee of independent directors from RNW has thoroughly reviewed the proposal and unanimously recommended shareholder approval for the merger. Pending all necessary approvals, the completion of the merger is anticipated in the early stages of the fourth quarter of this year.