TransAlta will pay $1.04bn to acquire the shares it does not own in TransAlta Renewables. Credit: petrmalinak/Shutterstock.com.

TransAlta has signed a definitive agreement to acquire all outstanding shares not already owned in its renewables subsidiary TransAlta Renewables (RNW) in a cash-and-stock deal worth C$1.38bn ($1.04bn).

RNW shareholders may exchange each RNW share for 1.0337 common shares of TransAlta or for C$13 in cash.  

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The consideration payable to RNW shareholders represents an 18.3% premium based on the closing price of its shares on the Toronto Stock Exchange (TSX) as of 10 July 2023.

C$800m of the total consideration will be paid in cash.

The merged entity will now operate as TransAlta and will remain listed on the TSX and on the New York Stock Exchange.

The merged entity will have direct ownership of a diversified portfolio of wind, hydro, solar, storage and natural gas generation assets.

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The combination will result in greater capital efficiencies and corporate synergies, providing higher cash flow retention and reduced corporate and administration costs.

TransAlta president and CEO John Kousinioris stated: “With the execution of our clean electricity growth plan well under way, it is clear that the strategies of both TransAlta and RNW have converged. Now is the right time to bring these two companies together to create a single clean electricity leader.

“The combined company’s greater scale and enhanced positioning will drive benefits and unlock value for all of our shareholders. The combination of the two companies will be underpinned by a single strategy that provides greater clarity to investors and will support future growth.”