TransAlta Corp (TA) bet on a spinoff of its wind and hydroelectric power plants. TA is the worst performing power generation stock in North America in the past year. The proposed spinoff would increase the company's value and help reverse two years of losses in the company.
Last June 26, TransAlta announced its initial public offering. From then, Canada's biggest publicly traded electricity generator gained an increase of 9.7%. The company planned to expansion of its wind and hydro power capacity to about 25% from its previous 15% in 2008. The increase was paired to the developments in eastern Canada and parts of the US even when power prices in its main markets of Washington and Alberta declined.
Analyst Jeremy Rosenfield at Dejardins Capital Markets said by phone last July 4 that investors have become willing to pay more for renewable energy companies.
The proposed spinoff could help increase the shares of TransAlta from Can$14.15 to Can$15.50 in Toronto said Benjamin Pham, a BMO Capital Markets analyst.
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