El Paso Electric halts sale consideration, sources say
06 DEC 2018
El Paso Electric’s [NYSE:EE] board of directors has elected to not proceed with a formal sale process, said four sources familiar with the matter.
The decision to hold off a sale of the regional Southwest utility came within the last few weeks after the company’s financial advisor Lazard canvassed a select group of potential buyers, these sources said.
After receiving soft interest, El Paso’s board opted to continue as a standalone business at this point, the sources said. It remains possible the board could change its mind and consider a sale again in the future.
El Paso received an in-bound approach from a strategic suitor earlier this year that led to the company soliciting the advice of an investment bank, as reported by this news service.
Several factors provided headwinds for a sale of the west Texas utility. El Paso has a highly-levered balance sheet, a disparate and politically-strained territory located along the border of the US and Mexico and a challenging regulatory environment, as reported.
Sister publication SparkSpread reported in May that El Paso received an unsolicited approach from an undisclosed company about a deal and that a formal review would likely come after Labor Day. This news service reported in early October that Lazard was contacting a small group of potential suitors.
El Paso Electric has a USD 2.31bn market cap and its shares closed at USD 56.25 on Tuesday compared to a 52-week high of USD 64.35.
The utility services 424,000 retail customers in southeast New Mexico and west Texas. Its 2 gigawatt generation fleet is comprised of about 70% natural gas-powered facilities and 30% nuclear, with 1,848 miles of transmission lines, according to an investors presentation.
El Paso did not return calls for comment.