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Sydnee Gatewood
Sydnee Gatewood
Articles (759) 

Occidental Petroleum Tops Chevron’s Offer for Anadarko

The $57 billion bid is a 20% premium to the current deal

April 24, 2019 | About:

Countering an earlier bid made by Chevron Corp. (NYSE:CVX), Occidental Petroleum Corp. (NYSE:OXY) offered to buy oil and gas driller Anadarko Petroleum Corp. (NYSE:APC) for $76 per share on Wednesday.

The 50-50 cash-and-stock offer, which consists of $38 in cash and 0.6094 shares of Occidental per share owned, values The Woodlands, Texas-based company at $57 billion, including debt, and is a 20% premium to Chevron’s bid.

On April 12, the San Ramon, California-based integrated oil and gas company announced it was buying Anadarko for $33 billion in cash and stock, valuing it at $65 per share. According to the terms of the agreement, shareholders will receive $16.25 in cash and 0.3869 shares of Chevron for each Anadarko share owned.

The Houston-based oil and gas producer said the combination with Anadarko is expected to create a global energy leader with enough scale and diversification to drive growth and deliver value to shareholders of both companies.

In a statement, Occidental President and CEO Vicki Hollub said Anadarko’s assets would also benefit from the company’s expertise in enhancing performance and productivity.

“Occidental and Anadarko have a highly complementary asset portfolio, providing us with a unique opportunity to realize significant operating, cost, and capital allocation synergies and achieve near-term cash flow accretion,” she said. “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.”

Following the announcement, shares of Occidental were down 2.65% at $60.73, while Anadarko’s shares surged 12% to $71.67. Shares of Chevron were also 2% lower at $119.56. Year to date, GuruFocus data shows Occidental’s stock has lost 1%, while Chevron has gained 10% and Anadarko has climbed 63%.

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The industry overview page shows Occidental and Anadarko are the third and fourth-largest companies in the oil and gas exploration and production sector, behind ConocoPhillips (NYSE:COP) and EOG Resources Inc. (NYSE:EOG).

Behind Exxon Mobil Corp. (NYSE:XOM), the industry overview page shows Chevron is the second-largest company in the integrated oil and gas sector.

Disclosure: No positions.

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About the author:

Sydnee Gatewood
I am an editorial assistant at GuruFocus. I have a BA in journalism and a MA in mass communications from Texas Tech University. I have lived in Texas most of my life, but also have roots in New Mexico and Colorado. Follow me on Twitter! @gurusydneerg

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