Texas Energy Firm Makes $2.6-Billion Bid for Competitor
Coastal Corp. today announced that it was making an unsolicited cash tender offer for Texas Eastern Corp. in a $2.6-billion deal that would combine two of Houston’s largest energy companies.
The $42 per share offer was about 40% more than Texas Eastern stock closed on Friday.
In early composite trading on the New York Stock Exchange, Texas Eastern’s stock soared more than $13 to $43.87 1/2 a share, after closing at $30 1/4 on Friday. Coastals’ stock was down 5/8 at $34 1/4 on the exchange.
Texas Eastern said in a statement this morning that the Coastal tender offer had not been made and that the company had not received a copy of the tender offer.
“When the offer is received, the board of directors of Texas Eastern will carefully consider the offer and expects to advise its shareholders of its recommendations not to take more than 10 business days from the date of commencement of such tender offer,” the Texas Eastern statement said.
Coastal said the decision to make the offer was approved at a Sunday night meeting of its board of directors. Coastal said it would begin the offer on Tuesday for all outstanding shares of Texas Eastern’s common stock.
James R. Paul, president and chief operating officer of Coastal, wrote to Dennis R. Hendrix, president and chief executive officer of Texas Eastern, requesting a meeting with the Texas Eastern board of directors to discuss a business combination.
A federal judge in Houston was to consider today a request from Coastal for a temporary restraining order to keep Texas Eastern’s board of directors from taking any action to prevent shareholders from accepting the offer.
Coastal is a Houston-based diversified energy firm with $8 billion in assets and operations in natural gas transmission and storage, gas and oil exploration and production, refining and marketing, coal, trucking and independent power production.
Texas Eastern is involved in natural gas and petroleum products, pipeline and international oil and gas exploration and production. It also refines and markets petroleum products at wholesale and is involved in real estate projects.
The offer, which will be made by Coastal’s wholly owned subsidiary, Colorado Interstate Corp., will be subject to conditions which will be disclosed in the company’s filing with the Securities and Exchange Commission.