Why Blackstone Group Stock Skyrocketed by Nearly 7% on Monday

Ever-acquisitive financial services titan Blackstone Group (NYSE: BX) might soon be the owner of a big utility, if a media report is to be believed. On Monday, investors clearly believed, as they traded the company's stock well up after the article was published. Blackstone's shares closed the day up by almost 7%, convincingly topping the S&P 500 index's nearly 3.3% rise.

A potentially electric development

Before market open, Bloomberg reported that Blackstone unit Blackstone Infrastructure Partners is currently engaged in discussions to purchase TXNM Energy. Citing unnamed "people familiar with the matter," the financial news agency said that Blackstone is the top candidate to buy the utility, as other would-be acquirers dropped out of the bidding.

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The talks between Blackstone officials and TXNM are apparently at an advanced stage. Bloomberg's sources said that an agreement on a deal could come in a matter of weeks. They stressed, however, that negotiations could also drag on or even see delays.

Blackstone investors are likely eager to see the company dive further into the power utility space. Such businesses are seeing heightened interest due in no small part to the rise of artificial intelligence (AI). This technology requires significant computing power, which in turn drives demand for electricity generation and supply.

A big player in its neighborhood

According to Bloomberg, TXNM is New Mexico's largest utility company. It owns two utilities, and as its name implies it operates both in that state and in neighboring Texas. Its customer base is roughly 800,000 homes and businesses. This isn't the first time management has sought a suitor; a planned sale to a unit of Spain-based Iberdrola for $4.3 billion in 2020 was nixed by regulators.

TXNM feels as if it would be a fine "get" for Blackstone, which has plenty of experience operating utilities, not least because it would position it to capitalize on the steep rise of AI. The company, usually a smart deal maker, seems to be chasing the right kinds of assets these days.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Blackstone. The Motley Fool has a disclosure policy.