TransAlta has offered Can$4.55 (US$4.20) per share, which it said is a 30% premium over the volume weighted average closing trade price for shares over 10 days prior to the offer.
The offer is being made through a Canadian subsidiary, and in response to the rejection said it stood by its bid.
Canadian Hydro Developers' board said the offer was 'inadequate and contrary to the interests' of the company and shareholders, and called the timing 'opportunistic'. The board unanimously recommended that shareholders reject the offer.
On the criticisms of opportunistic timing, the company's chief executive, Kent Brown, said: 'We're at a key inflection point in our company's 20-year history as we begin to reap the financial rewards of our significant development investments.'
Canadian Hydro Developers has 694MW of net capacity in operation, 185MW in and nearing completion, and 1624MW in development - including the 100MW Dunvegan run-of-river project. The portfolio comprises hydro and well as biomass and, predominantly, wind power projects.
While the offer was called unsolicited, Canadian Hydro Developers said that a formal, non-binding proposal was made on 7 July following a series of 'informal and casual conversations', though it noted they had been underway since last December.
Brown added that the company was positioned to weather the economic downturn and also capitalise on future growth opportunities. He said that the management of the business could do better for shareholders than the value of the offer they had been made by TransAlta.
In a statement, Canadian Hydro Developers said it has no need to access the debt markets until the third quarter of 2010, and has no equity requirements for its current projects until 2012.
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