Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Berry Petroleum (NYSE: BRY) jumped 18% today after it announced an agreement to be bought out by LinnCo (NASDAQ: LNCO).
So what: LinnCo has agreed to pay $2.42 billion for the company in an all-stock transaction that put the value at $46.24 per share as of yesterday's close. Shareholders will get 1.25 shares of Linn's stock for every share of Berry Petroleum. These transactions are a bit complicated for investors since Linn's stock can go up or down, changing the effective price paid to shareholders.
Now what: With LinnCo and LinnCo's only asset, LINN Energy (LINEQ), both are trading slightly higher today -- investors are getting an even bigger premium than yesterday's closing price. The assets from Berry will be sold to LINN Energy, keeping intact a tax advantaged structure for the LINN family of companies. These deals have a chance of falling through so I would take some gains off the table if I were a Berry Petroleum owner today.
Interested in more info on Berry Petroleum? Add it to your watchlist by clicking here.
