Breitburn Energy agrees to buy QR Energy in a deal to create one of the largest US oil producers structured as a master limited partnership.
July 24 (Reuters) - Breitburn Energy Partners LP agreed to buy QR Energy LP for $1.46 billion in a deal to create one of the largest U.S. oil producers structured as a master limited partnership.
QR Energy's stock rose as much as 10 percent to $20.85, its highest in nearly two years. Breitburn's shares fell 3 percent.
U.S. energy companies have created a number of master limited partnerships (MLP) in recent years because they pay no corporate taxes if they distribute most of their profits to investors. Investors also favor MLPs for their high yields.
Breitburn's offer, which represents a 19 percent premium to QR Energy's Wednesday close, is based on 64.9 million outstanding QR Energy shares, the companies said in a joint statement on Thursday.
QR Energy unit holders will receive 0.9856 of one Breitburn unit for each QR Energy unit they hold. That works out at $22.48 per unit, based on Breitburn's closing price on Wednesday.
"At first glance, the deal looks expensive for Breitburn," Raymond James analyst Pavel Molchanov wrote in a note.
Breitburn, headquartered in Los Angeles, has oil and gas assets in several U.S. states, including Michigan, Oklahoma and Texas. Some of its fields date back to the 1800s.
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