Occidental Revises Offer For Anadarko; To Sell Anadarko Assets To Total
(RTTNews) - Occidental Petroleum Corp. (OXY), which is in a bidding war with Chevron Corp. (CVX) to buy Anadarko Petroleum Corp. (APC), revised its offer for Anadarko, increasing the cash portion of its bid and removing any requirement for a shareholder vote. Separately, Occidental said that it reached a binding agreement to sell Anadarko's Algeria, Ghana, Mozambique and South Africa assets to Total S.A. (TOT) for $8.8 billion.
Occidental is still offering $76.00 per share for each share of Anadarko, the same as its offer from April, but more of it is now in cash. Occidental's revised offer is for $59.00 in cash and 0.2934 shares of Occidental common stock for each Anadarko share. Its previous offer was $38.0 in cash and 0.6094 shares of Occidental stock.
The revised proposal represents a premium of about 23.3% to the $61.62 per share value of Chevron's pending offer as of market close on May 3, 2019.
On April 29, 2019, Anadarko announced it determined that Occidental's prior proposal, made on April 24, could reasonably be expected to result in a "Superior Proposal", and the two companies have engaged since that determination.
Occidental today said, in a letter to Anadarko's Board of Directors, that its revised proposal did not require an Occidental shareholder vote, which has been repeatedly cited as the explanation for why Anadarko previously chose Chevron's $65 offer over its $76 offer.
Occidental also said Anadarko's counsel communicated to the company on Thursday evening a request for three board seats on the Occidental board. It believes its revised proposal, which is 78% cash, does not support this and therefore it has not included such a provision. It would expect to be in a position to close a transaction in the second half of 2019.
Occidental said,"The $1 billion breakup fee that resulted from your decision to select a $65 merger rather than the $76 per share we offered three weeks ago, will be borne by Occidental once we acquire Anadarko."
In Late April, Occidental Petroleum said that billionaire investor Warren Buffett's Berkshire Hathaway, Inc. (BRK-B, BRK-A, BRKa) has committed to invest $10 billion in the company to help finance Occidental's acquisition of Anadarko Petroleum.
In a separate press release, Occidental Petroleum today said that, in connection with its proposal to acquire Anadarko Petroleum, it agreed to sell Anadarko's Algeria, Ghana, Mozambique and South Africa assets to Total for $8.8 billion.
Anadarko' South Africa assets sale, which would be expected to close simultaneously or as soon as reasonably practicable afterwards, is contingent upon Occidental entering into and completing its proposal to acquire Anadarko.
The assets to be sold to Total represent approximately 6% of the expected net production and approximately 7% of the cash flow after capital expenditures of Occidental in 2020 pro forma for the acquisition of Anadarko.
Occidental said that the proceeds from the sale of the South Africa assets covers a portion of the cash consideration to fund the proposed acquisition of Anadarko.
Occidental stated that the sale fast-tracks the divestiture plan previously described by the company, delivering on the majority of the $10 billion to $15 billion of planned asset sales. After giving effect to the asset sale, Occidental continues to expect to deliver $2.0 billion of annual cost synergies and $1.5 billion of annual capital reductions from the proposed acquisition of Anadarko.
Occidental Petroleum also reported net and core income for the first quarter of 2019 of $631 million, or $0.84 per share. Net and core income for the fourth quarter of 2018 was $706 million, or $0.93 per share, and $922 million, or $1.22 per diluted share, respectively.
Oil and gas pre-tax income for the first quarter of 2019 was $484 million, compared to $145 million for the prior quarter. Excluding impairment charges, oil and gas pre-tax core income for the fourth quarter of 2018 was $365 million.
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