LS Power withdraws TransAlta takeover proposal


LS Power Equity Partners said it scrapped plans for a $7.8 billion takeover of TransAlta Corp TA.TO as shares in the Canadian power producer languished well below the bid price.

LS Power and Global Infrastructure Partners, which own 9 percent of TransAlta, offered to buy the company in July for $39 a share, saying it could achieve its expansion goals more easily as a private company.

TransAlta Chief Executive Steve Snyder told Reuters that the offer, which was not formerly made to shareholders, undervalued the company and its prospects in the North American power generation sector.

LS Power said in a regulatory filing that it reserved the right to make another takeover proposal in the future if market conditions support such a move.

TransAlta shares were off 93 Canadian cents, or 4 percent, at $22.90 on the Toronto Stock Exchange. As financial markets have swooned, TransAlta has fallen 38 percent since the time LS Power announced the offer.

The company runs coal- and gas-fired power plants as well as wind and geothermal facilities in Canada and the United States. Earlier this year, LS Power affiliate Luminus Management LLC campaigned to get the company to load up on debt to fund major stock buybacks.

"It's business as usual for TransAlta," spokesman Michael Lawrence said in response to the bid withdrawal. "We'll continue to execute our plan on which we believe will deliver near- and long-term value to our shareholders."

Snyder said that he believes takeover action in the electricity industry will be on hold until the market recovers to a point where players can be confident attaching a value to assets.

TransAlta closed the $303.5 million sale of two Mexican power plants to a generation firm owned by Ontario Teachers' Pension Plan and an arm of U.S. bailout target American International Group.

It has pledged to use $200 million of the proceeds to pay of purchases of its own shares.

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