"This morning, UBS increased its price target on shares of Linn Co. (LNCO) to $33.75 following the company’s increased bid for Berry Petroleum (BRY). In the report, UBS increased its EPS estimates and maintained its neutral rating. Shares of Linn Co. were giving back some of yesterday’s gains, falling 1.8% so far."
When one company pays way too much for another company, it is a bad deal for the stockholders of both companies. Management ALWAYS seem to enrich themselves at the shareholders expense. A merger on these terms will result in way too much debt, too much dilution and way too little cash. Oil is going down while production is going up. LNCO stock is likely to be in the 20s--the market is already sending a message that this is a very BAD deal for LNCO and will be a bad deal for BRY stockholders also.
Wow - you expect a dividend/distribution cut? I expect that LINE/LNCO will raise the dividend/distribution to $3.08 before all of this non-sense happened in May or so.
either that or it really needs bry more than letting us know.. Too much dilution but even if the divy not increased keeping it stable for a few years not awfully bad
I would expect the additional shares will be priced far below $36.75.
More like $30.
But that's a long ways off yet.
I am with you--all we can do is vote NO or simply sell out. We were sold out by mgmt. The market looks like it is beginning to see that this is a very bad deal for LNCO. When you add in the $1.5 billion in debt from BRY, it really stinks. Look for a dividend cut instead of any increases. Those new shares are really going to soak up a lot of our available dividend cash.
My vote is yes.
Much of the Barrons / Hedgeye thesis was predicated that $BRY deal would not get done. And if it doesn't, $LINE would not have the income to maintain its high payout, so such would need to cut, which will kill the stock in the near term. While I don't see it as grim at B&H, I do see their point about the aggressive payout. But w/ $BRY, their thesis dries up and blows away... and so will the shorts who entered on their recommendation and are already covering. Now that $LNCO has broken the falling resistance trendline, expect the squeeze to continue to the gap fill ~$36 and likely catching little resistance till the IPO price $36.75.
yes, LINN will be a monster once this deal closes... $38 is easy & div will be raised. LINN will have some pretty nice cash flow & div raise is easy
WOW, thats a pretty sweet deal for BRY holders... I guess all that talk about just sell your BRY shares now & buy some LNCO instead was a stupid idea. A bit high of a price, but LINN will be a monster once this deal gets done. Long-term this is good. Plus when you consider what could have happened if the deal fell through... this was definitely the right move :)
I would have preferred getting the deal put to bed at the original offer but management no doubt sees a VERY positive side to getting the deal done sooner rather than later. A failed merger would see some sag in the LINE/LNCO price for at least a short term period. Finishing this will see both move incrementally higher back towards the IPO price of LNCO. All good things in my estimation.