LS Power, GIP drop $7.8bn bid for power company

The private equity firms have said they reserve the right to file a new bid for TransAlta, a Canadian power generator that previously rejected their bid. TransAlta's shares were trading at $22.42 near the close of the market Thursday, a significant drop from the $39 per-share bid offered by the firms in July.

LS Power Equity Partners and Global Infrastructure Partners have withdrawn a $7.8 billion bid to take over Calgary-based power generator TransAlta, which had rejected the proposal as too low in August.

“We respect both LS Power and GIP but their highly conditional approach fails to recognise TransAlta’s fundamental value and growth potential,” TransAlta board chair Donna Kaufman said at the time. “Accepting their invitation to engage in dialogue about a possible acquisition of the company is not in the best interest of TransAlta and its shareholders.”

The firms had offered the $39 a share bid in July, a 29 percent premium over what the company’s shares

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were trading at on 18 July. LS Power owns 9 percent of TransAlta and is the company’s largest shareholder. The company’s shares were trading at $22.42 near the close of the market Thursday.

The firms said in a regulatory filing Thursday they reserved the right to modify their bid or make another proposal for the company.

TransAlta’s bid is one of several that have fallen apart recently, including a $12.8 billion proposal by Abertis Infraestructuras of Barcelona to buy the Pennsylvania Turnpike. State legislators opposed the transaction because they said it undervalued the highway, which runs across the state.

An investor group led by Providence Equity Partners walked away from a £1.9 billion deal for London-based business media group Informa in September. The syndicate, which also included The Carlyle Group and The Blackstone Group, dropped its bid after Informa rejected the offer.

LS Power is a private equity affiliate of New York-based hedge fund Luminus Management. The firm last year closed its second energy fund on $3.1 billion.

GIP, which in May closed a $5.6 billion infrastructure fund, is based in Stamford, Connecticut and is a partnership between Credit Suisse and General Electric.