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Algonquin Power & Utilities Corp.’s 2.6 MW Riviere-du-Loup hydroelectric generating facility near the town of Riviere-du-Loup, Quebec, 2010.Andre Kedl/Handout

Gas Natural Inc. shares have spiked 25 per cent over the past week, to a record high of $12.85 (U.S.) Wednesday, as Ontario-based Algonquin Power and Utilities Corp. continues to push to acquire the company.

Algonquin Power has made three bids to buy Gas Natural, in January, March, and May. The company slowly pushed its offer price up from $10 to $13, all of which were at a premium to Gas Natural's share price. But the acquisition target has swiftly rejected the "unsolicited and inadequate" offers, adding that it's not for sale.

On Wednesday, Algonquin kicked it up a notch by sending a letter to Gas Natural's board, urging them to accept the takeover "immediately." Algonquin is beseeching Gas Natural shareholders to vote against the incumbent board ahead of a July 30 shareholders' meeting.

Selling the company would "provide an immediate and compelling premium" to shareholders, the letter states, especially compared to Gas Natural's "highly uncertain standalone strategy." Algonquin also says the board rebuffed previous offers without any negotiation, and called Gas Natural's management team "inexperienced," "nepotistic" and "dysfunctional."

It'll be interesting to see whether this escalates to a full-blown proxy fight. In the meantime, Gas Natural shares are soaring. Wunderlich Securities upgraded the stock from hold to buy and raised its price target from $11 to $13.50, stating that the company "represents a compelling acquisition target as the industry continues to consolidate." The analysts expect an acquisition in the next 12-18 months at $14 a share.

Gas Natural, based in Ohio, distributes natural gas to 73,000 customers across seven U.S. states. Last November, the Public Utilities Commission of Ohio ordered an investigation of two Gas Natural subsidiaries, citing concerns about internal controls, executive compensation and alleged management self-dealing. Greg Osborne was appointed CEO on May 15, replacing his father, Richard Osborne.

Algonquin – which has a market cap of about $1.7-billion (Canadian) – acquired a 4.9 per cent stake in Gas Natural in April.

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