Active Stocks: Tallgrass Energy, LP [NYSE: TGE] has been on a downward spiral for some months now. However, things changed yesterday when the stock gapped up to close the day at $19.46. This followed an offer by private equity firm Blackstone to take the company private. Blackstone has offered a valuation of $19.50 per share. This is a premium for the pipeline company which a day earlier, was trading at $14.35.
At the moment, Blackstone holds 44% of Tallgrass Energy. By taking charge of the remaining shares, the private equity firm will have full control in the management of TGE affairs. The move by Blackstone has come as a surprise to investors. According to Bloomberg, some of TGE’s pipelines are up for re-contracting. The expectation was that Blackstone would wait it out.
Looking at the price action, yesterday’s price move saw Tallgrass gain by 35.61%. It’s a significant move considering that the company’s shares have fallen by 40% since March. In the day, volumes were quite high too, closing the day with 24.43 million shares traded. This massive price move saw the company close the day with a market cap of $5.475 billion. There isn’t expected to be much criticism of Blackstone’s offer. As per a Bloomberg analysis of this potential deal, Blackstone doesn’t seem to have cut off the distribution. This is often a major cause of criticism for such deals, since it impacts on other industry stakeholders such as midstream distributors.
In the day, there isn’t much activity in TGE’s pre-market trading. However, unless negative news on the deal emerge in the day, it could possibly trade at the $19.46 to $19.50 (the offer price) range in the day. U.S markets are also relatively stable at the moment. The S&P 500 closed yesterday’s trading up by 0.89%, while the NASDAQ closed the day with gains of 1.16%.