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El Paso Corp. Message Board

  • dormie18 dormie18 Dec 7, 2011 10:08 PM Flag

    S&P's target for EP is $27

    From the S&P report dated Dec. 3, 2011 in which they reiterate their HOLD rating on EP:

    "Our 12-month target price of $27 is based on
    terms of the KMI offer, which is comprised of
    $14.65 per share in cash, 0.4187 of a KMI share
    (recently valued at $12.56 per EP share) and
    0.64 of a KMI five-year warrant ($40 exercise
    price; current value about $1). EP holders may
    instead elect to receive $25.91 in cash or 0.9635
    of a KMI share, subject to proration, plus 0.64 of
    the KMI warrant."

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    • You can put these numbers in a Google Docs spreadsheet and put in the real time prices for EP and KMI to calculate the value real time. Use =GoogleFinance("EP") in one cell and GoogleFinance("KMI") in another cell for the real time prices. Based on current prices deal is worth

      $25.91 all cash
      $27.39 mixed election warrant=0
      $28.35 mixed election warrant=$0.96
      $29.31 all KMI stock, warrant=0
      $30.27 all KMI stock, warrant=$0.96

      EP stock made it down to $1 less than the all cash price yesterday for a 4% discount and probably 8% annualized return just to the all cash price.