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Stockbeat - Anadarko Rallies as Occidental Tops Chevron's Offer

Published 04/24/2019, 12:58 PM
Updated 04/24/2019, 01:34 PM
© Reuters.

Investing.com - Anadarko Petroleum surged Wednesday after Occidental Petroleum topped Chevron 's takeover bid for the company, setting the stage for a bidding war in the Permian Basin.

Occidental proposed acquiring Anadarko for $76 per share -- $38 in cash and the rest in stock. The offer values the exploration-and-production company at $57 billion including debt. That's above Chevron's $65-per-share agreement to acquire the company.

Anadarko (NYSE:APC) rallied more than 11%, Occidental (NYSE:OXY) fell 2% and Chevron (NYSE:CVX) fell more than 2%.

Occidental's efforts to acquire Anadarko have been rebuffed several times. The latest offer suggests that Occidental it is prepared to engage in bidding war with Chevron to land Anadarko.

In March, Occidental laid out three acquisition proposals for Anadarko, in which it made the case that its offer represented both superior strategic and financial value.

"Occidental believes its proposal is superior both financially and strategically for Anadarko’s shareholders, creating a global energy leader with the scale and geographic diversification to drive growth and deliver compelling value and returns to the shareholders of both companies," the company said in a statement Wednesday.

The tie-up would create a production powerhouse and deliver $1.5 billion of cost cuts, improving free cash flow by $3.5 billion a year by 2021, according to Occidental, which is $1.5 billion more than the value Chevron believes it can extract from the deal.

"Anadarko has great assets," Occidental CEO Vicki Hollub said in a interview on CNBC Wednesday. "We are the right acquirer ... because we can get the most out of the shale."

Attention now turns to Chevron as many anticipate that the oil major may up its bid for Anadarko amid plans to enhance its upstream portfolio and strengthen its positions in large shale, deepwater and natural-gas basins.

Latest comments

A bidding war always results in a 'Winner's curse' !
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