Houston-based Linn Energy has agreed to buy Berry Petroleum Company in an all-stock deal announced Thursday that is worth $4.3 billion, including the assumption of debt.
Under the terms of the agreement, Linn affiliate LinnCo will tender 1.25 of its own common shares for each share of Denver-based Berry. The total stock consideration changing hands will be worth roughly $2.5 billion, with assumed Berry debt accounting for the balance of the purchase price. After completing the purchase, LinnCo will transfer the newly acquired Berry shares to Linn in exchange for shares of the latter’s sibling company.
The deal is expected to close by June 30, pending regulatory and shareholder approvals.
The acquisition is the largest transaction in the oil and gas sector so far this year, and, according to Bloomberg, the largest ever for Linn. In announcing the deal, Linn said the addition of Berry’s assets will expand its presence in such areas as California, Colorado, and the Permian Basin in Texas. Linn also said it expects the acquisition to increase its production capacity by 30 percent and boost its proven reserves by 34 percent.
Linn was among the companies that made the energy sector a hotbed of deal activity in 2012. In a transaction announced in February, the company agreed to pay $1.2 billion for properties in Kansas’s Hugoton Basin owned by British oil giant BP. Four months later, Linn struck another deal with BP, agreeing to acquire natural gas properties in Wyoming for $1 billion. (Baker Botts advised Linn on both of those transactions.)
Latham & Watkins is advising both Linn and LinnCo on the Berry acquisition, with a team led by Houston-based corporate partners Michael Dillard and Sean Wheeler. Latham has previously represented Linn in connection with multiple large notes offerings. The firm also advised underwriters led by Barclays last year on LinnCo’s $1 billion initial public offering on the Nasdaq.
Other Latham lawyers advising on the deal include tax partners Timothy Fenn and Laurence Stein; capital markets partners Divakar Gupta, Alexander Cohen, Roderick Branch, and Barton Clark; environmental partner Joel Mack; employee benefits partner David Della Rocca; antitrust partner Marc Williamson and antitrust counsel Sydney Smith; government contracts partner David Hazelton; and finance partner Catherine Ozdogan. The associates from the firm working on the transaction are Christopher Little, Jesse Myers, Enoch Varner, Jaime Petenko, Matthew Dominy, Michael Fisherman, Eric Matuszak, Lauren Murphey, Matthew Dewitz, David Miller, Samuel Rettew, Matthew Rinegar, Yizhi "Ken" Wang, Buck Endemann, Keely O’Malley, Adam Kestenbaum, Dean Baxtresser, and Annemarie Dunleavy.
Charlene Ripley serves as Linn’s general counsel.
As part of the deal agreement, the boards of both Linn and LinnCo created special committees to ensure that no conflicts between the two sibling companies arose. Akin Gump Strauss Hauer & Feld is representing the Linn board’s conflicts committee with a team led by Houston-based capital markets partners Christine LaFollette and John Goodgame, as well as tax partner W. Thomas Weir. LinnCo’s conflicts committee is being advised by Locke Lord corporate cochair Don Glendenning, in Dallas. Tax partners Christopher Allison and Andrew Betaque are also advising, along with associates David Lange, Kevin Satter, and Danielle Olson.
Berry, meanwhile, has turned to a Wachtell, Lipton, Rosen & Katz group led by corporate partners Daniel Neff and David Lam as its outside counsel for the transaction. Tax partner T. Eiko Stange and executive compensation and benefits partner Adam Shapiro are also advising, along with associates Jenna Levine, Kevin Cooper, Michael Sabbah, Michael Schobel, and Franco Castelli.
Former Holland & Hart partner Davis O’Connor serves as Berry’s general counsel.
