Why Berry Petroleum's Shares Popped
Feb 21st 2013 2:54PM
Updated Feb 21st 2013 3:35PM
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 jumped 18% today after it announced an agreement to be bought out by LinnCo .
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 , 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.
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The article Why Berry Petroleum's Shares Popped originally appeared on Fool.com.Fool contributor Travis Hoium has no position in any stocks mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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