TORONTO The directors of Canadian Hydro Developers KHD.TO have urged shareholders to reject an unsolicited bid by TransAlta Corp (TA.TO), saying it undervalues the assets and prospects of the renewable energy firm.
Canadian Hydro's board said on Thursday it sees TransAlta's offer as "inadequate and contrary to the interests of Canadian Hydro and its shareholders."
On July 20, TransAlta said it would offer C$4.55 a share for Canadian Hydro, implying a deal value of about C$654 million ($600 million).
Canadian Hydro says the bid undervalues the company and is opportunistic.
"Due to the recent financial crisis, the markets are not fully reflecting Canadian Hydro's intrinsic value," the company said in a statement.
TransAlta said it had expected such as response to its offer.
"There's nothing surprising and certainly nothing that TransAlta hasn't already considered, and we'll be awaiting their directors' circular for more fulsome details," TransAlta spokesman Michael Lawrence said.
"And it's the Canadian Hydro shareholders that will make the ultimate decision," he added.
Shares of Canadian Hydro ended up 2 Canadian cents at C$5.10 on the Toronto Stock Exchange on Thursday. TransAlta closed up 7 Canadian cents at C$20.87.
(Reporting by Wojtek Dabrowski and Jeffrey Jones; editing by Rob Wilson)