SEC to Investigate Linn Energy’s Buyout Deal with Berry Petroleum (LINE)
Oil and natural gas firm, Linn Energy LLC (NASDAQ: LINE) said on Tuesday that the NYSE: BRY) and its accounting.
Linn Energy, which went public in October, agreed to acquire Berry Petroleum Company in a stock deal valued at $2.42 billion in February.
However, Linn Energy was criticized for its accounting. In June, Hedgeye Risk Management LLC, an independent research company said the firm was using options to guarantee price for its gas output, adding that it did not take into account the full cost of put options and other capital expenses.
The Company said that it will be now difficult to predict over when the deal (buyout) will be closed due to SEC’s inquiry.
Earlier the Company had said that the deal was expected to close shortly once Linn Energy’s shareholders’ meeting was concluded in September following the release of fiscal third quarter results.
Shares of Linn Energy plunged 18.74% in regular trading hours on Tuesday. The Stocks has now plunged to its more than three-year low.
Shares of Berry Petroleum fell about 5.80% in regular trading hours on Tuesday.
Meanwhile, Linn Energy shares were downgraded by two brokerage firm on Tuesday. An analyst at Raymond James said that the informal inquiry in to the proposed buyout will postpone the acquisition procedure by “at least 30 days”.
The SEC has asked Linn Energy to keep documents related to the acquisition, its hedging strategy and the non-GAAP accounting records.
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Post Written By: Ed Liston
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.
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