Shares of El Paso Electric Surge on Buyout Offer
What happened
Shares of El Paso Electric (NYSE: EE) were up 13.6% as of 1:50 p.m. EDT Monday after it was announced that J.P. Morgan Investment Management was acquiring the utility.
So what
According to El Paso's press release, J.P. Morgan Investment Management has offered buy all outstanding shares of the compay for $68.25 per share. Including debt, the deal totals $4.3 billionAs proposed, that represents a slight premium to where the stock is trading today.
The only possible reason that the stock isn't trading at the proposed acquisition price is that there have been some subsequent press releases from law firms saying they are investigating whether El Paso's board did enough due diligence before agreeing to this deal. These kinds of lawsuits often pop up when a company makes this kind of announcement, though, so they are probably not worth taking too seriously.
Now what
From an retail investor's standpoint, there isn't much to gain now. El Paso's shareholders prior to the announcement will enjoy the price bump, but from here, the difference between where the stock is trading and the agreed purchase price aren't enough to justify a short-term buy. Viewed from the other side of the deal, El Paso is small enough that anyone invested in J.P Morgan probably isn't going to consider this a needle-mover.
Nothing to see here, folks.
10 stocks we like better than El Paso ElectricWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and El Paso Electric wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of March 1, 2019
Tyler Crowe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.