Shares of Regency Energy Partners LP soared on Wednesday, after General Electric Co. unit GE Energy Financial Services said it bought a stake in the natural gas processor and distributor from HM Capital Partners LLC for $603 million.
Regency shares rose $2.49, or 8.3 percent, to $32.49, after trading as high as 33.45, earlier in the session, to a new 52-week high.
GE Energy, on Tuesday, said it bought 91 percent of Dallas-based Regency's general partner and 16.7 million subordinated units from private equity firm HM Capital. GE Energy also bought 1.1 million of the company's subordinated units from members of Regency's management.
"With this acquisition, we expect GE Energy Financial Services to utilize Regency as a vehicle to sell its portfolio of midstream assets into the partnership over time to drive distribution growth," Wachovia Securities analyst Michael Blum wrote in a note to clients.
AG Edwards analyst Ronald F. Londe kept a "Buy" rating on Regency and raised his price target to $40 from $31, implying upside of around 33 percent to Tuesday's $30 closing price.
"This transaction removes an uncertainty hanging over the partnership as we had always thought that HM Capital would sell its ownership interest in Regency Energy over a relatively short period of time after the initial public offering," Londe wrote.
Shares of Fairfield, Conn.-based General Electric rose 12 cents to $39.41.
Your Ads At Here
