Last August, private equity giant Blackstone Group (NYSE:BX) offered to acquire all the outstanding shares of Tallgrass Energy that it didn't already own for $19.50 apiece. That implied a nearly 36% premium to the company's closing price the day before and 12% above where shares had traded over the previous 30 days.
Investors, however, thought the deal looked light since it was at a slight discount to what Blackstone paid for its initial 44% stake in Tallgrass earlier in the year. Furthermore, they didn't like the fact that there was a provision in the deal for management to get an additional 30% premium for their shares, which they said was compensation needed for retention.
In response, Blackstock has increased its offer to public shareholders to $22.45 per share. That price represents a 15.1% premium to its initial proposal and is 22.7% above the stock's closing price yesterday.
Tallgrass Energy's board has accepted this higher offer from Blackstone. As a result, the deal should close by the second quarter of next year. Also, as part of the agreement, Tallgrass will stop paying its high-yielding dividend. Thus, income investors might want to cash out now since shares are trading very close to Blackstone's offer and consider reinvesting their proceeds into one of these high-yielding stocks.