What: The shares of TECO Energy (NYSE: TE), an electric and gas utility company, surged on Thursday on reports that the company was considering strategic alternatives, including a possible sale of the company. The stock closed on Thursday up 15.6%.
So what: TECO confirmed in a press release that the company had retained Morgan Stanley as an advisor as it explores strategic alternatives. No other details were given by the company, which issued the press release as a response to the rumors that sent its stock soaring.
TECO operates primarily in Florida. Its electric utility, Tampa Electric, serves 700,000 customers, while its gas utility, Peoples Gas, serves 350,000 customers in Florida, making it the largest natural gas distributor in the state. The company also operates the largest utility in New Mexico, New Mexico Gas Co., which serves 513,000 customers, as well as a coal mining company with operations in Tennessee, Kentucky, and Virginia.
Now what: With the company in the early stages of considering its options, news of a major development is likely weeks, or even months, away. However, other small utility companies have been buyout targets in the recent past, including NV Energy, which was bought by Berkshire Hathaway in 2013, and Pepco Holdings, which is being acquired by Exelon.
TECO could prove to be an attractive acquisition for a larger company, but right now, the stock is being boosted by pure speculation.