Linn Energy, Berry Petroleum fall as SEC reviews merger
Shares of Linn Energy (LINE), a master limited partnership, are retreating as the SEC reviews the company's proposed takeover of Berry Petroleum (BRY). The latter company's stock is also dropping. WHAT'S NEW: Investors are worried about the outcome of the deal because the SEC appears to have issued a second round of comments to Linn Energy about the deal, RBC Capital analyst John Ragozzino wrote in a note to investors. The worst case outcome, however, is that the deal will be delayed until around mid-July, versus the initial target date of July 1, the analyst contended. Ragozzino believes that Linn's decline today is unwarranted, and that the decline has created an attractive buying opportunity. WHAT'S NOTABLE: Linn's acquisition of Berry is the first time an MLP has attempted to buy an entire energy exploration company. MLPs do not pay taxes on their profits. TODAY'S PRICE ACTION: In mid-afternoon trading, Linn Energy dropped 2.3% to $33.10, while Berry slumped 2.6% to $43.55. Shares of LinnCo (LNCO), whose sole purpose is to own LINN Energy units, are down 2% to $36.49.