Acquisition of El Paso Pipeline Partners, L.P. by Kinder Morgan, Inc. May Not Be in Shareholders’ Best Interests
Robbins LLP is investigating the proposed acquisition of El Paso Pipeline Partners, L.P. (NYSE: EPB) by Kinder Morgan, Inc. (NYSE: KMI). On August 10, 2014, the companies announced the signing of a definitive merger agreement pursuant to which Kinder Morgan will acquire El Paso. Under the terms of the agreement, holders of El Paso will receive .9451 Kinder Morgan shares and $4.65 in case for each share of El Paso, for a combined consideration of $38.79 per share.
Is the Proposed Acquisition Best for El Paso and Its Shareholders?
Robbins LLP’s investigation focuses on whether the board of directors at El Paso is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $38.79 merger consideration represents a premium of just 15.4% based on El Paso’s closing price on August 8, 2014. This premium is significantly below the average one-day premium of over 26% for comparable transaction in the past five years. Additionally, the merger consideration is substantially below the target price of $40.00, set by an analyst at Deutsche Bank on April 9, 2014. Further, on July 16, 2014, El Paso released its earnings for the second quarter of 2014, reporting strong financial results. Specifically, the company reported second quarter distributable cash flow before certain items of $141 million, up 9% from $129 million for the same period last year.
In light of these facts, Robbins LLP is examining El Paso’s board of directors’ decision to merge the company now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
El Paso shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.
El Paso shareholders interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.