Anadarko backs Occidental takeover bid, leaving Chevron on the outside

Anadarko’s board has declared Occidental Petroleum’s sweetened $US38 billion ($54 billion) takeover “superior,” allowing Chevron to either boost its offer or walk away with a $US1 billion breakup fee.

The announcement comes about a month after Anadarko accepted Chevron’s bid. Credit:Bloomberg

The announcement by Anadarko, which had rebuffed several prior bids from Occidental, comes almost a month after it agreed to be purchased by Chevron for $US33 billion. Chevron has so far refused to increase its offer, saying its proposal is a better long-term option for Anadarko shareholders.

The takeover of Anadarko has been a rare public fight for an oil industry that hasn’t seen many bidding wars. Occidental Chief Executive Officer Vicki Hollub’s recruitment of billionaire Warren Buffett and an $US8.8 billion accord to offload African oil and gas fields to Total SA appeared to have been key milestones in winning the board’s favor. Anadarko directors had previously chosen Chevron’s offer even though it was substantially cheaper than that of Occidental, which, as a smaller company, would have to take on much more leverage to do the deal.

Chevron CEO Mike Wirth has signalled he’s willing to end his pursuit of a deal if the price gets so high that it imperils investor returns. “We strongly believe that the combination of our two companies create superior long-term value for shareholders of the combined company,” Wirth said on an April 26 earnings conference call.


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