Occidental offers $38 billion for Anadarko, topping Chevron

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Occidental Petroleum Corp on Wednesday started the first takeover battle for a major oil company in years, offering 38 billion U.S. dollars for Anadarko Petroleum Corp, a bid that topped an offer of 33 billion U.S. dollars by Chevron Corp.

Both suitors are offering a premium for Anadarko's holdings in the Permian Basin of West Texas and New Mexico. The vast shale field holds oil and gas deposits that can produce supplies for decades using new, low-cost drilling techniques.

Occidental's surprise 76 U.S. dollars-per-share bid is valued at 57 billion U.S. dollars, including debt. That is well above Chevron's 65 U.S. dollars-per-share offer, worth 50 billion U.S. dollars including debt, and would make an Occidental-Anadarko deal the fourth-largest in terms of oil production.

Anadarko said it had received the bid, but had not yet determined whether it was a “superior proposal,” and for now reaffirmed its recommendation of a sale to Chevron.

“We are confident the transaction agreed to by Chevron and Anadarko will be completed,” said Chevron spokesman Kent Robertson.

Occidental, meanwhile, said it boosted the cash portion of its offer to 50 percent. Chevron offered 25 percent cash and 75 percent stock.

Anadarko shares jumped 11.6 percent to close at 71.40 U.S. dollars, well above the 65 U.S. dollars per share offered by Chevron. Occidental shares dipped 0.6 percent to 62 U.S. dollars and Chevron's were 3.1 percent lower at 118.28 U.S. dollars on the day.

A deal would add nearly a quarter million acres to Occidental's holdings in the lucrative Permian shale basin, and double its global production to 1.4 million barrels of oil and gas per day.

“We are very confident. Our proposal is so strong, it's definitely superior, and we now know the value which we can communicate to shareholders,” Vicki Hollub, Occidental's chief executive officer, said in an interview. She said the deal would boost cash flow and allow Occidental to raise its dividend over time.

Still, Occidental has lost more than 7 percent of its value since it disclosed its interest in Anadarko. It faces hurdles to sell its own shareholders on the deal.

“We don't think a bidding war with Chevron (CVX) is in the best interest of OXY shareholders,” analysts at KeyBanc Capital Markets wrote in a client note.

Occidental is “going head-to-head against a supermajor four times its size” and Chevron is likely to win, said Pavel Molchanov of Raymond James, adding “this is an extremely fluid situation.”

Source(s): Reuters