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Shares of El Paso Electric Surge on Buyout Offer

By Tyler Crowe - Updated Jun 4, 2019 at 4:33PM

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The electric utility is getting gobbled up by J.P. Morgan's investment arm.

What happened 

Shares of El Paso Electric (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 to buy all outstanding shares of the company for $68.25 per share. Including debt, the deal totals $4.3 billion. As proposed, that represents a slight premium to where the stock is trading today. 

Electric transmission lines.

Image source: Getty Images.

The only possible reason 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 a 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 JPMorgan Chase probably isn't going to consider this a needle-mover. 

Nothing to see here, folks.

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