Chevron and Occidental Start Bidding War for Anadarko
Occidental Petroleum said on Wednesday that it is proposing to buy Anadarko at a higher price than the one Anadarko had accepted from Chevron, potentially opening a bidding war for one of the U.S. companies with the strongest positions in the Permian.
Occidental Petroleum sent a letter to
Anadarko’s board of directors today, offering “a superior proposal” to buy
Anadarko for $76.00 per share, in which Anadarko shareholders would receive
$38.00 in cash and 0.6094 shares of Occidental common stock for each share of
Anadarko common stock.
The $76.00 per share cash-and-stock
proposal from Occidental represents a premium of around 20 percent to the
current value of the transaction with Chevron that Anadarko had accepted,
Occidental said in a statement.
“The 50-50 cash and stock transaction
is valued at $57 billion, based on Occidental’s closing price on April 23,
2019, including the assumption of net debt and book value of non-controlling
interest,” according to Occidental.
Less than two weeks ago, Chevron said that it had entered into a definitive agreement to buy Anadarko in a stock and cash transaction valued at US$33 billion that will boost Chevron’s position in the Permian, the Gulf of Mexico, and in liquefied natural gas (LNG). The acquisition consideration is structured as 75 percent stock and 25 percent cash, providing an overall value of US$65 per share based on the closing price of Chevron stock on April 11, 2019.
The total enterprise value of the Chevron-Anadarko transaction is US$50 billion, including the assumption of net debt and book value of non-controlling interest, while Occidental’s offer values a potential transaction at US$57 billion.
In the letter to Anadarko’s board
today, Occidental said that it had made three acquisition proposals to Anadarko
since late March and it was “surprised and disappointed” that the board had not
engaged with Occidental on them.
“We have been focused on Anadarko for
several years because we have long believed that we are ideally positioned to
generate compelling value from a combination with them. We look forward to
engaging immediately with Anadarko's Board and stakeholders to deliver this
superior transaction,” Occidental’s president and CEO Vicki Hollub said in a
statement.
Following Occidental’s bid, Anadarko shares shot up 11 percent in pre-market trade on Wednesday.