Linn Energy to pay $600 mln more for Berry Petroleum

Reuters

* Berry shareholders to now get 1.68 LinnCo shares, up from1.25

* Deal valued at $4.9 bln, including debt

* Berry shares up about 11 pct

Nov 4 (Reuters) - U.S. oil and gas producer Linn Energy LLC raised its purchase price for Berry Petroleum Co by $600 million to $4.9 billion, the companies said.

The higher price follows a drop in the share price of LinnCoLLC, a holding company set up by Linn for acquisitions.

Under the new agreement, Berry shareholders will receive1.68 LinnCo shares for each Berry share they hold. This ishigher than the original offer of 1.25 shares.

At LinnCo's Friday close of $33.21, the offer implies $55.79for each Berry share. The revised offer price represents a 14percent premium to Berry's Friday close of $48.75.

Berry shares rose 11 percent to $54, while Linn shares wereup 2.4 percent in early trading on Monday.

"Berry's management had continued to support the merger, butit was certainly cognizant of the fact that current LinnCo trading levels did not provide sufficient valuation for Berryunder the old deal terms," Wells Fargo Securities analysts wrotein a note to clients.

Shares of LinnCo, which only owns Linn units and has noassets or operations, dropped 10 percent through Friday closesince the deal was announced on Feb. 21.

Berry shares rose 26 percent during the same period.

The Securities and Exchange Commission began an inquiry inJuly related to the deal as well as Linn and LinnCo's hedgingstrategies and certain other financial measures.

The boards of the three companies have approved the deal,but it remains subject to shareholder approvals.

The deal is the first acquisition of a corporation by an oiland gas producer structured as a master limited partnership or alimited liability company.

Berry will be converted into a limited liability company,allowing Linn to own Berry's assets in a pass-through entitywithout any immediate payment of tax.

Analysts said enhanced prospects for the Berry's Wolfcampacreage in the Permian Basin in Texas could also be a reason forthe increased purchase price.

Berry increased production from its Permian assets by 22percent in the third quarter.

Linn has said that acquiring Berry will help it raise itsoutput by a third and boost its oil reserves.

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