The Midland, Texas-based MLP Legacy Reserves LP (Nasdaq: LGCY) has rejected an offer to go private from private-equity fund Apollo Management VII LP for approximately $435 million in cash, citing improving markets.

“After careful review of the proposal letter from Apollo Management VII LP…and subsequent negotiations, (the conflicts committee) has determined that it is in the best interest of the unitholders of Legacy Reserves LP to terminate discussions with Apollo Management,” the company said in a statement.

Apollo Management offered $14 per Legacy unit, acquiring up to 31.1 million outstanding units for the Permian-focused company. The price represented a 42% premium over the closing price on April 2, and a 51% premium over a 30-day average. In a letter to Legacy at that time, Apollo Management vice president John Suydam said, “We believe our proposal to be extremely attractive for the partnership in today's economic climate and energy markets.” Apollo is managed by New York-based private-equity firm Apollo Management LP.

As of year-end 2008, Legacy operated 1,603 gross productive wells and owned nonoperated interests in 2,247 gross productive wells in the Permian Basin, Texas Panhandle, Oklahoma and various other states. Production as of Dec. 31 was 8,553 barrels of oil equivalent per day. Proved reserves were 30.8 million barrels equivalent.

Legacy retained Houston-based investment-banking firm Tudor, Pickering Holt & Co. Securities Inc. as financial advisor to review the acquisition proposal. Richards, Layton & Finger PA was legal advisor to Legacy.

The conflicts committee reaffirmed its confidence in management's ability to successfully execute Legacy's current business plan going forward. “Legacy management is excited to continue acquiring and developing oil and natural gas properties. Since the proposal was announced, there has been a significant improvement in oil prices, the banking environment, and the public capital markets have reopened. In light of these improvements, management expects to recommend that the board of directors maintain Legacy's quarterly distribution rate of $0.52 per unit payable in mid-August as favorable liquidity and distribution coverage is expected.”