Last week, Anadarko announced that it reached a definitive agreement to sell itself to Occidental and that it has paid a $1 billion breakup fee to Chevron, which earlier elected not to sweeten its offer for the independent producer.
Monday 13, May 2019
(Bloomberg) --Occidental Petroleum Corporation will move forward with its $38 billion takeover of Anadarko Petroleum Corporation, the oil industry’s biggest deal in at least four years, after Chevron Corporation bowed out of the bidding.
The world’s third-largest oil explorer by market value said it will instead increase its share buybacks by 25 per cent and Occidental confirmed it will go ahead with the acquisition.
Chevron’s departure left Occidental, a much smaller rival, free to proceed with a takeover that will double the acquirer’s daily output to the equivalent of more than 1.3 million barrels, on par with OPEC members Angola or Libya.
The outcome also vindicates Occidental CEO, whose opening appeals to Anadarko were pilloried by prominent investors and analysts as an overreach.
Vicki Hollub, Occidental CEO, said, “This exciting transaction will create a global energy leader with a world-class portfolio, proven operational capabilities and industry leading free cash flow metrics.”
“This transaction further establishes Occidental as a premier operator in prolific global oil and gas regions,” said Hollub.
Since the bids became public last month, Occidental’s smaller size and financial resources relative to Chevron handicapped its pursuit of Anadarko. Houston-based Occidental’s stock was seen as a less-robust currency than Chevron’s, a defect Hollub cured by lining up support from Warren Buffett and Total, and upping the cash portion of her bid to 78 per cent from 50 per cent.
The higher cash portion also allowed her to pursue the deal without seeking shareholder approval.
Anadarko’s board embraced the Occidental proposal as superior on 6 May, giving Chevron up to four days to come back with a revised offer.