El Paso Corporation
Robbins Umeda LLP Announces an Investigation of El Paso Corporation
Robbins Umeda LLP, a shareholder rights litigation firm, has commenced an investigation into possible breaches of fiduciary duty and other violations of state law by members of the board of directors of El Paso Corporation (NYSE: EP) in connection with their efforts to sell the company to Kinder Morgan, Inc. (NYSE: KMI)
On October 16, 2011, El Paso announced that it had entered into a definitive merger agreement pursuant to which Kinder Morgan will acquire all outstanding shares of the company in a cash and stock transaction. The offer is comprised of $14.65 in cash, 0.4187 in Kinder Morgan shares (valued at $11.26 per El Paso share), and 0.640 in Kinder Morgan warrants (valued at $0.96 per El Paso share) based on Kinder Morgan’s closing price on October 14, 2011. The transaction is expected to close in the second quarter of 2012.
Robbins Umeda LLP’s investigation focuses on whether El Paso’s board is undertaking a fair process to obtain maximum value and adequately compensate shareholders in light of the company’s positive financial results. On August 4, 2011, El Paso reported a diluted EPS of $0.25 per share, a 13.64% increase compared to the $0.22 of diluted EPS reported for the same period in the previous year, and above analyst estimates of only $0.24. Notably, several financial analysts have released target prices for El Paso which value the company’s stock between $28.00 and $29.50 per share, considerably higher than the price being offered by Kinder Morgan.
Furthermore, Robbins Umeda LLP is investigating whether the terms of the agreement negatively impact El Paso shareholders. For example, the deal contains a staggering $650 million termination fee and a prohibitive no solicitation clause, both of which are designed to prevent El Paso from seeking higher bids for the company and its shareholders.
If you own stock in El Paso and would like more information about your shareholder rights, please complete the form below and we will contact you directly. We also welcome you to call us at 800-350-6003.