The Successful Investor Hotline – Friday, July 25, 2008

Article Excerpt

TRANSALTA CORP. $34.95, Toronto symbol TA, rose 15% this week after it received an informal takeover offer worth $39.00 a share from a private equity partnership that includes Luminus Management. Luminus currently owns about 9% of TransAlta’s stock, and has pressured the company to sell non-core assets, buy back shares and raise the dividend. The stock currently trades about 10% below the offer. That’s mainly due to concerns that problems in credit markets will make it difficult for the buyers to borrow the cash they need to complete the takeover. TransAlta is a major supplier of Alberta’s electricity. The buyers could have difficulty winning regulatory approval if the takeover significantly increases TransAlta’s debt, and limits its ability to invest in new power plants or environmental upgrades. We still see TransAlta as a buy. MDS INC. $14.56, Toronto symbol MDS, plans to restructure its drug testing and analytical device businesses. This will cost the company $28 million, but should cut its annual pre-tax expenses…