LINN Energy LLC (LINE) LinnCo, LLC (LNCO) and Berry Petroleum Co. (BRY) announced the signing of a definitive merger agreement pursuant to which LINN and LinnCo will acquire all of Berry's outstanding shares for total consideration of $4.3 billion, including the assumption of debt.
The agreement was unanimously approved by the boards of directors of LINN Energy, LinnCo and Berry. The transaction is expected to be tax-free to Berry shareholders. The transaction is structured as a stock-for-stock merger of Berry with LinnCo followed by the acquisition of the Berry assets by LINN. Upon completion of the merger, LinnCo will contribute the Berry assets to LINN in exchange for LINN units.
As per the terms of the agreement, LinnCo has agreed to issue 1.25 common shares for each common share of Berry outstanding prior to the merger.
The consideration to be received by Berry shareholders is valued at $46.2375 per Berry share based on LinnCo's closing price as of February 20, 2013. This represents a premium of 19.8 percent to the Berry closing price on February 20, 2013, and a premium of 23.1 percent to its one month average price at that date.
The transaction is subject to the approval of the shareholders of Berry and LinnCo and the unitholders of LINN Energy, as well as customary closing conditions, including clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The transaction is expected to close by June 30, 2013. The combined company will be headquartered in Houston, Texas.
The transaction is expected to be highly accretive to distributable cash flow per unit. In the first full year following closing, accretion is expected to be in excess of $0.40 per unit.
LINN said it plans to recommend to its board of directors an increase in the current quarterly distribution of 6.2 percent. LINN's current quarterly distribution of $0.725 per unit, or $2.90 per year, would increase to $0.77 per unit, or $3.08 per year. The recommended increase is anticipated to take effect in the quarter immediately following the closing of the transaction, which is estimated to occur on or before June 30, 2013.
In separate press release, LINN Energy, LLC reported a fourth-quarter net loss of $187.50 million, or $0.83 per basic unit, compared to a loss of $189.62 million or $1.09 per basic unit in the year ago quarter.
The latest-quarter result included a noncash loss of $8 million, or $0.03 per unit, from the change in fair value of hedges covering future production, an expense of $276 million, or $1.22 per unit, on the impairment of long-life assets, and a gain of $3 million, or $0.01 per unit, related to other items.
Excluding these items, LINN Energy's adjusted net income for the fourth quarter 2012 was $93.96 million, or $0.41 per basic unit, compared to adjusted net income of $89.11 million, or $0.51 per basic unit, for the fourth quarter 2011. Analysts polled by Thomson Reuters expected the company to report earnings of $0.40 per share. Analysts' estimates typically exclude special items.
For comments and feedback: editorial@rttnews.com