© 2013 The Texas Lawbook.
By Natalie Posgate
Staff Writer for The Texas Lawbook
(February 21) — Houston-based LINN Energy, LLC and LinnCo LLC announced Thursday that they have entered a merger agreement with Denver–based Berry Petroleum Company in which LinnCo will acquire all of Berry’s outstanding shares for $4.3 billion. This transaction marks the first time ever for a public C-Corp to be acquired by an upstream LLC or MLP.
Latham & Watkins is representing LINN and LinnCo in the deal. Lead partners in the transaction include Michael Dillard and Sean Wheeler from the firm’s Houston office. Lead Houston associates include Christopher Little, Jesse Myers, Enoch Varner, Jaime Petenko, Matthew Dominy and Michael Fisherman.
Latham is the designated counsel for LINN and LinnCo. Most recently Latham served as the underwriters’ legal advisors for LinnCo’s initial public offering in October 2012, which raised $1.1 billion.
This is the first LINN-related deal for Dillard to lead, but he has worked with LINN Energy general counsel Charlene Ripley in the past. In 2006, Dillard helped Anadarko Petroleum Corporation – where Ripley was the G.C. at the time – in its $22.5 billion acquisition of Kerr-McGee Corporation and Western Gas Resources.
LINN created LinnCo specifically to enhance LINN’s ability to raise additional equity capital to execute on its acquisition and growth strategy. LinnCo’s acquisition of Berry will allow the transaction to be more tax efficient, Dillard said.
According to Dillard, the LINN Energy-LinnCo partnership will be a model for how MLPs in the upstream sector will handle their transactions in the future. He says the creation of an entity to acquire corporations allows parent companies like LINN to have more access to the capital market and retail investors.
“I think you will see a trend going forward of other MLPs creating the skins of entities to go out and acquire the corporations,” Dillard said. “You’re going to see more upstream consolidation and more and more mergers occurring in the next 12 months.”
The acquisition of Berry offers numerous operational and financial benefits for LINN, including a substantial growth in the company’s portfolio with increased presence in California, the Permian Basin, East Texas, the Rockies and the Uinta basin.
“LINN Energy is really a deal shop and they are all about growth and getting bigger with the right assets,” Dillard said. “I believe LINN felt Berry was a perfect fit for the assets that LINN wants in their portfolio.”
Other Texas Latham lawyers assisting in the transaction include partners Tim Fenn, Divakar Gupta, Joel Mack, and Catherine Ozdogan, and associates David Miller, Samuel Rettew, Matthew Rinegar and Annemarie Dunleavy.
Akin Gump Strauss Hauer & Feld is advising the conflicts committee of the LINN Energy board of directors, with Houston partners Chris LaFollette, John Goodgame and Thomas Weir as the lead attorneys.
Locke Lord is the legal team for the conflicts committee of LinnCo’s board of directors and is led by managing partner Don Glendenning of the firm’s Dallas office, as well as Dallas associates David Lange and Kevin Satter. Dallas partners Chris Allison and Andrew Betaque and associate Danielle Olson assisted on the tax side of the transaction.
New York firm Watchtell, Lipton, Rosen & Katz is representing Berry in the deal.
The transaction is expected to close on or before June 30. The combined company will be headquartered in Houston.
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