Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Atlas Energy (ATLS) jumped 11% today after it announced an acquisition by subsidiary Atlas Pipeline Partners (NYSE: APL).
So what: The company is acquiring TEAK Midstream for $1 billion in cash, which will be paid for, in part, by a $400 million preferred share offering from Atlas Pipeline Partners. Atlas Energy expects the acquisition to add $25 million to $40 million in annual distributions, or $0.45 to $0.75 per share, when the assets are mature.
Now what: The acquisition looks to be extremely profitable for Atlas Energy and gives the company exposure to the growing Eagle Ford Shale play. Based on the projected cash flow from Atlas Pipeline Partners, I think the market has fully priced in the benefit of the acquisition, so I'm not jumping on shares today. Remember that this isn't a fully mature asset yet, and it'll take time to increase distributions to the projected level, so the $5.00-per-share jump today has a lot of optimism built in.
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