ANADARKO Petroleum has accepted Occidental’s hostile acquisition bid, after Chevron announced that it would not increase its offer to acquire Anadarko.
Chevron had agreed last month to buy Anadarko for US$50bn including debt, but Occidental then lodged a hostile bid of US$57bn. Anadarko provisionally accepted Occidental’s bid on 6 May, giving Chevron until close of business on 10 May to produce a counteroffer. Chevron has announced that it will not increase its bid and will back out of its original offer. Anadarko will have to pay a US$1bn separation fee to Chevron.
“Winning in any environment doesn’t mean winning at any cost. Cost and capital discipline always matter, and we will not dilute our returns or erode value for our shareholders for the sake of doing a deal,” said Chevron’s Chairman and CEO Michael Wirth.
The takeover will make Occidental the top producer in the Permian Basin, but fears that Occidental might be overpaying for the acquisition drove its shares to a ten-year low. Shareholders will not get a vote on the deal and some have expressed concern and threatened to vote against the board at the annual shareholder meeting on 10 May.
“This transaction further establishes Occidental as a premier operator in prolific global oil and gas regions with the ability to deliver production growth of 5% through investment in projects with industry-leading returns,” said Vicki Hollub, President and Chief Executive Officer of Occidental. “With greater scale, an unwavering focus on driving profitable growth, and our commitment to growing our dividend, we are creating a unique platform to drive meaningful shareholder value.”
The transaction is expected to close in the second half of 2019 and Occidental is planning to sell Anadarko’s African assets to Total for US$8.8bn once the acquisition is complete.
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