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Linn Co, LLC Message Board

  • outthink Oct 31, 2013 8:55 AM Flag

    Net present value of LNCO’s offer is ~$70

    When the net present value of incremental dividend stream that BRY shareholders will receive is taken into consideration, the value of 1.25 LNCO for 1 BRY, is ~$70.

    The NPV of the incremental dividend stream that they will receive over the next ten years, ($3.08 x 1.25) – 0.32, discounted by an interest rate of 10% is $21.69; at an interest rate of 0% it is $35.30.

    The value of the stock value component will be worth $30 to 36 share price of LNCO x 1.25 or $37.50 to 45.00.

    Add the stock price of $37.50 - 45.00 plus the NPV of the incremental dividend stream, $21.69 - 35.30, the transaction is worth $59.19 - 80.30. Split the difference and the value is ~$70.

    This is how institutions and mutual funds will be looking at the deal.

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