Linn Energy to buy Berry Petroleum in $2.5 billion stock deal

HOUSTON, Thu Feb 21, 2013 — Oil and gas producer Linn Energy LLC will buy Berry Petroleum Co. for $2.5 billion in stock, boosting its reserves of lucrative oil and raising total output by about a third.

Berry shareholders will receive 1.25 shares of LinnCo. LLC, a company set up by Linn to raise money for acquisitions and other purposes. LinnCo, which went public in October, only owns Linn units and has no assets or operations.

Berry shareholders will get an equivalent of $46.24 per share based on LinnCo. stock’s closing price of $36.99 on Wednesday. This is a 19.8 percent premium to Berry’s closing price of $38.59.

Berry had 54.15 million shares outstanding as of Oct. 26. The deal is valued at $4.3 billion including debt, the companies said.

Berry shares rose 14 percent in premarket trade.

Linn’s offer is higher than Berry’s intrinsic value of $44.06 as measured by Thomson Reuters StarMine.

The StarMine model is a measure of a stock’s current value when considering analysts’ growth estimates for five years, and then modeling the typical growth trajectory over a longer period of time.