Harwood Feffer LLP (
) is investigating potential claims against the board of directors of El Paso Corp. ("El Paso" or the "Company") (NYSE: EP) concerning the proposed acquisition of the Company by Kinder Morgan, Inc. (“Kinder Morgan”) in a transaction valued at $38 billion.
On October 16, 2011, El Paso and Kinder Morgan announced they had entered into a definitive agreement pursuant to which Kinder Morgan will acquire El Paso. Under the terms of the agreement, Kinder Morgan will acquire all outstanding shares of El Paso for approximately $26.87 per share. El Paso shareholders will receive $14.61 in cash per share plus 0.4187 shares of Kinder Morgan (valued at approximately $11.26 per El Paso share) and 0.640 Kinder Morgan warrants (valued at approximately $0.96 per El Paso share). The warrants have an exercise price of $40 and a five-year term. El Paso shareholders will be able to elect either i) $25.91 in cash, ii) 0.9635 shares of Kinder Morgan common stock, or iii) $14.65 in cash plus 0.4187 shares of Kinder Morgan common stock for each El Paso Share held. Under all circumstances, El Paso shareholders will receive the 0.640 warrants per El Paso share held, subject to proration. El Paso’s board, two members of which will join the Kinder Morgan board the close of the transaction, has agreed not to solicit competing transactions. At least one analyst has set a price target for El Paso stock of $28.00 per share.
Our investigation concerns whether the board of directors has breached its fiduciary duties by failing to adequately shop the Company and whether the board undertook a fair process and obtained fair consideration for El Paso stockholders. In light of the fact that the transaction will make Kinder Morgan the fourth largest energy company in North America, El Paso shareholders may be in a position to demand an increased premium.