Warren Buffett’s proposed buyout of NV Energy took many Nevadans by surprise Wednesday.
But it was on a predictable path the day after: The target company’s stock price soared, and lawyers began prowling for shareholders who want to sue for selling too low.
NV Energy’s stock closed Thursday at $23.62 per share, up $4.34 or 22.5 percent from Wednesday, when the sale was announced after the closing bell.
It was the largest percentage gain of the day Thursday for companies listed on the New York Stock Exchange. What’s more, approximately 55.3 million shares of NV Energy changed hands, a 2,213.6 percent increase over its 65-day average volume.
Also on Thursday, the Texas law firm Deans & Lyons LLP announced “an investigation” of the Las Vegas power company’s board of directors.
In a press release distributed through PR Newswire, the firm said NV Energy stockholders would “only” get $23.75 per share, cash, from Buffett’s MidAmerican Energy Holdings Co. The firm said it would seek “to obtain more value” for shareholders in part by “ensuring the highest price reasonably available is obtained.”
It also listed the name, phone number and email address of an attorney whom shareholders can contact to discuss “their rights and remedies.”
NV Energy spokeswoman Jennifer Schuricht declined comment, saying she can’t discuss potential litigation.
MidAmerican, based in Des Moines, Iowa, plans to buy all outstanding stock in NV Energy for $5.6 billion cash. The deal, valued at about $10 billion including debt, still requires approval by NV Energy’s shareholders as well as state and federal agencies.
The sale is expected to close in the first quarter of 2014.
Buffett, the chairman and CEO of MidAmerican’s Omaha, Neb., parent Berkshire Hathaway, has made billions buying steady if not boring companies like insurance providers and utilities.
In general, news of a pending buyout is often followed by an immediate jump in the stock price of the target company.
For instance, shares of Las Vegas’ Service1st Bank of Nevada’s parent company jumped 34 percent on its first full trading day after Bank of Nevada’s parent announced plans to buy the company.
It was the largest percentage gain that day of any company listed on the Nasdaq Stock Market or the New York Stock Exchange.
Meanwhile, shareholder lawsuits are now commonplace with buyouts of U.S. public companies.
For deals announced in 2010 and 2011, “almost every” acquisition worth at least $100 million prompted multiple shareholder lawsuits, according to Cornerstone Research.
Only a “small fraction” of those suits resulted in payments to stockholders. Most settled for additional disclosures or, less frequently, changes in the merger terms, Cornerstone reported.