LinnCo LLC (LNCO), whose shares have dropped since proposing a stock takeover of Berry Petroleum Co. (BRY) in February, raised the offer to $2.94 billion after its target “consistently outperformed expectations.”
LinnCo, whose only asset is stock in Linn Energy LLC (LINE), increased the exchange ratio for Berry holders to 1.68 shares of LinnCo from 1.25, the oil and gas producers said in a statement today. That values Berry at $55.79 a share, up from $46.24 when the deal was first announced, according to data compiled by Bloomberg. Both companies agreed to extend the deal’s deadline to Jan. 31 after an earlier date of Oct. 31 lapsed.
LinnCo agreed in February to purchase Denver-based Berry for $2.42 billion to increase oil reserves. The value of the transaction has fallen as LinnCo’s stock price dropped. In July, the U.S. Securities and Exchange Commission told the company it had begun a “non-public inquiry” and was seeking documents related to the transaction as well as hedging strategies and certain financial measures of Linn and LinnCo.
The commission had no further questions on amended S-4 filings, Houston-based Linn and LinnCo said in a Nov. 1 statement.
“The last week or so it looks like they made some progress getting the SEC stuff in order and so that should be out of the way and now you have an offer that is higher than the current stock price,” said Jason Wangler, an equity analyst at Wunderlich Securities Inc. in Houston. “I think it’s pretty open and shut.”
The deal is structured as a merger of Berry with LinnCo followed by the acquisition of the Berry assets by Linn Energy. The total value of the deal is $4.9 billion including debt, the statement showed.
Berry shares had been trading at a premium to the LinnCo offer. They rose 9.7 percent in premarket trading to $53.50 as of 8:25 a.m. in New York.
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