CHEVRON’S agreed merger with Anadarko Petroleum looks under threat after the US independent said it will resume negotiations with Occidental Petroleum, which lodged a hostile US$57bn bid last week.
Anadarko had agreed earlier this month to be bought by Chevron in a deal worth US$50bn including debt, but the company announced today that it will now consider Occidental’s hostile offer after the board determined it could “reasonably be expected to result in a ‘Superior Proposal’ as defined in the Chevron merger agreement.”
“The Occidental Proposal reflects significant improvement with respect to indicative value, terms and conditions, and closing certainty as compared to any previous proposal Occidental made to Anadarko,” it said in a statement.
Occidental revealed in its takeover offer that it had made three previous bids for Anadarko, each of which was larger than the deal Anadarko agreed with Chevron. Reacting to the deals, which would be the largest in the sector since Shell agreed to buy BG Group in 2015, Wood Mackenzie analyst Zoe Sutherland noted the deal might be too much of a financial stretch for Occidental.
If it does win out, Sutherland said a merged Occidental and Anadarko would join ConocoPhillips as the second ‘super-independent’. The firms both have complementary assets in the burgeoning US Permian Basin.
Alternatively, a deal with Chevron would create what Wood Mackenzie analyst Roy Martin described as the fourth ‘ultramajor’ joining ExxonMobil, BP and Shell. The merged company would become the largest producer in the Permian Basin and the Gulf of Mexico.
Anadarko noted in its statement that “there can be no assurance that negotiations will result in a transaction that is superior to the pending transaction with Chevron” and the terms of any future deal may vary from those reflected in Occidental’s offer.
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