Shares of El Paso Electric Surge on Buyout Offer
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.
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.
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.
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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.