(Bloomberg) -- David Dehaemers is stepping down as chief executive officer of Tallgrass Energy LP in the midst of a contentious attempt by Blackstone Infrastructure Partners to take the pipeline company private.
Bill Moler, previously president and chief operating officer, will replace Dehaemers effective immediately, Tallgrass said Monday. Dehaemers will retire from the Tallgrass board on Dec. 31.
“It’s time for me to move on to the next chapter in my life, and I am pleased to transition my role to Bill Moler, who I have known for more than 20 years,” Dehaemers said in a statement.
It’s been 90 days since Blackstone offered to buy the Tallgrass units it doesn’t already own for $19.50 apiece. Tallgrass most recently said a committee of independent directors continued to consider and negotiate the offer.
“The situation is pretty unprecedented, so not sure him leaving means anything either way for the potential for a deal,” said Hinds Howard, a portfolio manager at CBRE Clarion Securities LLC. “It was clear Blackstone controlling TGE was never long term going to include Dehaemers.”
Tallgrass shares traded 0.9% higher to $18.22 a share at 1:12 p.m. in New York, after falling earlier in the day.
Citigroup Inc. analyst Timm Schneider said the move could signal that a deal is “more likely than not.”
“We believe there is a wide-spread market expectation that TGE stock could fall much further if a deal were to break,“ Schneider said in a note to clients Monday. Since Dehaemers is the largest shareholder and founder of Tallgrass, it doesn’t seem likely that he “would be willing to give up the reigns voluntarily, unless he was forced out of course,” he said. “But we don’t know what actually happened.”
Side Letters
Dehaemers said in January that he planned to stay on as CEO “at least through the end of 2019.” Those comments, made on a quarterly conference call, came shortly after Blackstone announced it was buying its initial stake.
Last month, Dehaemers gave a lengthy defense of the so-called side letters that were disclosed when Blackstone took control of Tallgrass’s general partner in March. The letters have attracted criticism from some investors for guaranteeing a price for some executives’ units that’s higher than the offer to other shareholders.
Dehaemers called the arrangements “retention and lockup agreements,” and he attributed the drop-off in the Tallgrass stock price to some of the biggest shareholders selling their holdings.
“If the goal was to ‘clean’ TGE’s reputation in front of public unitholders in case a transaction does not come to fruition, we don’t believe that will really work either because Bill Moler was also part of the side letter agreement,” Schneider said.
Having traded above Blackstone’s $19.50-per-unit offer for much of September and October, Tallgrass has since then slipped below that level after the company cut the rates it charges on a key oil pipeline.
©2019 Bloomberg L.P.
RECOMMENDED FOR YOU
POPULAR