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Why TransMontaigne Partners Surged 12.7% Today

By Tyler Crowe – Nov 26, 2018 at 11:50AM

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Another oil and gas midstream company gets gobbled up.

What happened

Shares of master limited partnership TransMontaigne Partners (TLP) were up 12.7% as of 11:45 a.m. EST today after the company announced that a private equity firm would acquire it.

So what

As it happens every time there is a buyout, shares are up to the proposed acquisition price -- $41 per share in this case. The storage and logistics specialist announced that ArcLight Energy Partners Fund, a subsidiary of private equity firm ArcLight Capital Partners, will acquire the outstanding stake it doesn’t already own. 

It was likely just a matter of time until this merger happened, as ArcLight and its various affiliate funds owned the general-partner stake in TransMontaigne and had made an offer in July to acquire it. This new offer is a 7.9% premium to its prior offer. 

Oil storage tanks

Image source: Getty Images.

Now what

TransMontaigne had a lot of qualities an investor would want in an oil and gas storage and logistics company. Management was conservative with its payout, kept a modest debt profile, and kept payouts more or less growing since its IPO close to a decade ago. That was likely a large reason ArcLight was interested in the business in the first place. With the buyout price baked into the stock, though, there is no reason for investors to buy now. 

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.

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