Shares of Tallgrass Energy soared dramatically on Wednesday after the Blackstone offered the company to take it private leading to a 34% percent spike, bringing the stock price close to the level offered as part of the deal.
Blackstone is offering to buy the rest of ‘Tallgrass‘ Class A stock for $19.50 per share in cash. Before the offer, Blackstone already has a huge stake in the energy company. Currently, it holds 44% of its outstanding equity, but the offer represents 35.9% premium over its closing price on Tuesday.
“As you are aware, the Sponsors own, in the aggregate, 23,652,463 Class A Shares and 100,655,121 Class B Shares of Tallgrass, representing 44.2% of the total outstanding equity interests in Tallgrass as of July 31, 2019 (as reported by Tallgrass in its Quarterly Report on Form 10-Q filed with the SEC on July 31, 2019) and 100,655,121 units in Tallgrass Equity, LLC. In addition, the Sponsors own 100% of the non-economic general partner interests in Tallgrass through their wholly-owned subsidiary, Tallgrass Energy GP, the general partner of Tallgrass,” reads the offer letter from Blackstone.
As part of its offer, Blackstone would give Tallgrass, a midstream energy company that operates pipelines for crude oil and natural gas, 12.0% premium to the volume-weighted average price of the Class A Shares over the last 30 calendar days through August 27, 2019.
“The Proposal is non-binding, and no agreement, arrangement or understanding between the parties with respect to the Proposal or any other transaction (including any agreement to commence or continue negotiations) shall be created until such time as mutually satisfactory definitive agreements have been executed and delivered,” the Proposal further reads.
“The Sponsors are well-positioned to negotiate and complete the transaction, including obtaining any required financing, in an expeditious manner. If this Proposal is acceptable to the Conflicts Committee, the Sponsors are prepared to negotiate definitive agreements in respect of the Transaction immediately.”
