Blackstone Inc.

🇺🇸New York Stock Exchange
Back to all articles
Blackstone Inc. stock analysis BX overview
Neutral 0

TXNM, Blackstone push back on AG’s suggestion to void $400 million stock deal

🏛️ New Mexico Attorney General Raúl Torrez filed a motion claiming a $400 million stock sale by TXNM Energy to Blackstone is void due to lack of regulatory approval.

⚖️ The AG argues the issuance required prior approval from the state's Public Regulation Commission under existing merger and acquisition laws.

🏢 TXNM and Blackstone disagree, asserting state law does not prohibit the transaction as long as the buyer did not acquire a controlling interest.

💼 The 8 million shares sold to Blackstone represented a 7.5% stake in TXNM at $400 million, cheaper than Blackstone's proposed $61.25 per-share acquisition price.

🔒 The stock transaction included restrictions on Blackstone’s voting rights, preventing board appointments or director removals during the interim.

⏸️ The Public Regulation Commission paused the main merger application pending a review of this specific stock transaction issue.

📅 A public hearing on the matter is scheduled for April 30 at 9 a.m. in New Mexico.

💰 TXNM and Blackstone warn voiding the deal would replace $400 million in equity with debt, impacting financial stability and potentially raising customer costs.

🏗️ The companies argue the stock issuance was intended to finance utility infrastructure projects regardless of whether the full merger proceeds.

✉️ Prosperity Works, an Albuquerque nonprofit, originally contested the transaction in a February filing, bringing the issue to light.

⚖️ The Attorney General contends the deal was an integral part of the merger agreement negotiated simultaneously with the main purchase price.

🤝 TXNM and Blackstone are proposing pragmatic alternatives, including retroactive approval or restructuring the current financing arrangement.

⚡ Similar legal challenges are facing New Mexico Gas Co., which is awaiting a verdict on its sale to Bernhard Capital Partners.

Bullish Signals
  • TXNM Energy Inc. successfully issued and sold 8 million shares to Blackstone for $400 million, providing significant financing for utility infrastructure projects.
  • The transaction gave Blackstone a 7.5% stake in TXNM at a price of $50 per share, which is lower than the $61.25 per-share cost of the proposed $11.5 billion acquisition.
  • TXNM and Blackstone argue that state law permits the stock issuance since Blackstone does not hold a controlling interest in the utility.
  • The Public Regulation Commission has agreed to pause its review while considering pragmatic alternatives, such as retroactively approving the financing transaction or allowing restructuring.
  • Blackstone and TXNM have maintained that their investment is far from secret and was public knowledge until contested by Prosperity Works.
  • Both companies are offering constructive solutions like retroactive approval or restructuring to ensure investors have predictability and certainty.
  • The stock transaction was structured to finance ratepayer projects, with Blackstone's equity stake preventing them from making board appointments.
Risk Factors
  • New Mexico Attorney General Raúl Torrez is seeking to void a $400 million stock deal between TXNM Energy Inc. and Blackstone, alleging it was an integral part of a merger that lacked prior regulatory approval from the Public Regulation Commission.
  • If the court voids the transaction as argued by the AG, it would force TXNM to replace $400 million in equity with debt, significantly impacting its financial condition and potentially increasing costs for customers.
  • The proposed transaction created uncertainty surrounding future investment at a time when utility infrastructure projects rely on financing stability.
  • TXNM and Blackstone's voting rights were restricted, preventing the affiliate from making board appointments, which complicates governance should the deal be challenged.
  • A public hearing regarding this dispute is scheduled for April 30 at 9 a.m., creating immediate regulatory uncertainty that could stall the proposed $11.5 billion acquisition.
  • Similar legal challenges to a pending utility sale involving Bernhard Capital Partners and New Mexico Gas Co. suggest a broader pattern of regulatory scrutiny for private equity deals in the state.
Full Analysis
Texas Natural Resources Group Inc., which does business as TXNM Energy Inc., and Blackstone Inc. are contesting the New Mexico Attorney General's proposal to void a $400 million stock transaction completed last year. In a filing Monday, Attorney General Raúl Torrez argued that the issuance of 8 million shares in TXNM to a Blackstone affiliate was an integral part of a proposed sale of PNM's parent company to the private equity firm and should be considered void due to a lack of prior regulatory approval from the three-member Public Regulation Commission (PRC). The Department of Justice asserted that state law mandates mergers and acquisitions receive pre-approval, but TXNM and Blackstone disagree, citing a competing motion. The utility company's parent argued that state law does not prohibit share issuance unless the buyer acquires a controlling interest, which was not the case here; Blackstone received a 7.5% stake for $400 million ($50 per share) compared to the $61.25 per-share price of the separate acquisition proposal. Blackstone emphasized that the transaction helped finance infrastructure projects for ratepayers and was widely publicized in national and New Mexico news outlets, noting that the deal was contested only after Prosperity Works filed a challenge in February. The companies warned that declaring the transaction void would effectively replace $400 million of TXNM equity with debt, potentially increasing costs for customers and creating financial uncertainty. Consequently, TXNM and Blackstone are seeking pragmatic alternatives, such as retroactive approval or restructuring the deal before the PRC review concludes. The PRC has paused the main merger application pending resolution of this dispute, with a public hearing scheduled for April 30 at 9 a.m., while the Attorney General maintains that both the merger agreement and PIPE transaction were negotiated simultaneously and must be approved together under the New Mexico Public Utility Act.