TC Energy (TRP) Hit With Setback in Adverse Court Ruling
Canada-based energy infrastructure operator TC Energy Corporation TRP recently encountered a significant legal setback when the Delaware Chancery Court ruled against the company in a class action lawsuit related to its acquisition of Columbia Pipeline Group Inc. in July 2016. The court found that the former executives of Columbia breached their fiduciary duties and made material disclosure omissions, and TC Energy was deemed aware of and complicit in these breaches.
The 2016 Acquisition of Columbia Pipeline Partners
In July 2016, TC Energy acquired Columbia Pipeline Partners, aiming to expand its presence in the natural gas pipeline sector. The acquisition allowed TC Energy to strengthen its strategic position in key regions and enhance its ability to transport and deliver natural gas to customers. At the time, the transaction was deemed fair value, with TC Energy paying Columbia shareholders $25.50 per share. The successful completion of the acquisition played a pivotal role in TC Energy's growth strategy and positioned the company as a prominent player in the industry.
Implications of the Court Ruling
The recent court ruling has put TC Energy in a challenging position. Finding the company at fault, the court awarded damages to shareholders in the amount of $1 per share, with the final award expected at around $400 million, plus interest. However, the exact allocation of liability between Columbia's former executives and TC Energy will be determined in a subsequent proceeding.
TC Energy's Response
While TC Energy strongly disagrees with the ruling, it is currently evaluating its options for appeal once the final judgment is entered and the allocation of liability is determined. The company disputes several findings of fact and law in the ruling. However, an appeal process is anticipated to take around one year, prolonging the resolution of this legal matter. It is important for investors and stakeholders to monitor the progress of the appeal and its potential impact on TC Energy's financial standing and operations.
Zacks Rank & Stock Picks
TC Energy carries a Zacks Rank #3 (Hold) at present. Meanwhile, investors interested in the energy space might look at operators like Profire Energy PFIE, Civitas Resources CIVI and Baker Hughes BKR, each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Profire Energy: The 2023 Zacks Consensus Estimate for Profire Energy indicates 125% year-over-year earnings per share growth. PFIE has a trailing four-quarter earnings surprise of 11.1%, on average.
Profire Energy is valued at around $58.2 million. PFIE has seen its shares drop 12.1% in a year.
Civitas Resources: It has a market capitalization of some $5.6 billion. The Zacks Consensus Estimate for CIVI’s 2023 earnings has been revised 19% upward over the past 60 days.
Civitas Resources, headquartered in Denver, CO, has a trailing four-quarter earnings surprise of roughly 4.5%, on average. CIVI shares have increased 30.8% in a year.
Baker Hughes: The 2023 Zacks Consensus Estimate for Baker Hughes indicates 68.5% year-over-year earnings per share growth. BKR beat the Zacks Consensus Estimate for earnings in two of the last four quarters and missed in the other two.
Baker Hughes is valued at around $32 billion. BKR has seen its shares gain 8.6% in a year.
Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.
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