El Paso Shares Jumped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of natural gas pipeline operator El Paso (NYS: EP) soared 23% today after industry peer Kinder Morgan (NYS: KMI) agreed to buy it for about $21 billion.

So what: The all-cash deal values El Paso at $26.87 per share and represents a juicy 37% premium to its closing price on Friday. Kinder is making the move to expand in the midst of the continent's shale field boom, and judging by the stock's 8% pop today, Mr. Market seems very pleased with the strategy and purchase price.

Now what: While El Paso shares are probably all popped out, Kinder Morgan could just be getting started. The combined company would boast about 80,000 miles of pipe across the U.S., creating by far the largest midstream energy and pipeline company in the nation. Given all the pricing power that this newly created monster stands to possess, Kinder Morgan shares are certainly worth considering.

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At the time thisarticle was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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