Anadarko: Oxy’s revised takeover bid superior to Chevron’s

Anadarko Petroleum’s Board has said that Occidental Petroleum’s revised takeover bid received on May 5, 2019, is a “Superior Proposal” to the agreement Anadarko reached with Chevron.

Anadarko said on Tuesday its board of directors, in consultation with its financial and legal advisors, had unanimously determined that the revised acquisition proposal was a superior one.

To remind, Oxy had on April 24 entered the race with Chevron announcing offering to buy Anadarko for $76.00 per share, in which Anadarko shareholders would receive $38.00 in cash and 0.6094 shares of Occidental common stock for each share of Anadarko common stock.

This was already seen as a superior proposal to Chevron’s, however, Oxy on Sunday filed a revised bid offering to acquire Anadarko for consideration consisting of $59.00 in cash and 0.2934 of a share of Occidental common stock per share of Anadarko common stock, representing a premium of approximately 23.3% to the $61.62 per share value of Chevron’s pending offer as of market close on May 3, 2019.

$8.8 billion sale to Total

Meanwhile, Oxy has reached a binding agreement with France’s Total to sell Anadarko’s assets in Africa (Algeria, Ghana, Mozambique, South Africa) for a consideration of $8.8 billion in the event of successful completion of Occidental’s ongoing bid for Anadarko. Oxy said on Sunday the proceeds of the sale of these non-strategic assets to Total covers a portion of the cash consideration to fund the proposed acquisition of Anadarko.

Commenting on the Total deal, Greig Aitken, director, M&A research, at global natural resources consultancy Wood Mackenzie, said on Monday: “This is a move that will alleviate the concerns of Anadarko’s shareholders. Anadarko’s main concern appears to be uncertainty regarding the execution of the deal – can Oxy finance the deal; will the bid value erode due to a falling share price; will its shareholders acquiesce?

“Combined with the recent US$10 billion Berkshire Hathaway commitment, this disposal has allowed Oxy to increase the cash component of its bid from 50% to 76% (an increase of approximately US$10.5 billion). The new proposal does not require a vote from Oxy’s shareholders.

“Oxy’s offer is currently 23% higher than Chevron’s bid, with a materially larger cash component. With added certainty around Oxy’s ability to complete the deal, it will be very difficult for Anadarko not to accept. Chevron has the firepower to increase its offer, but will have to decide whether it also has the appetite.”  

Aitken said Occidental is predominantly an onshore operator with expertise in tight oil and enhanced oil recovery in the US and the Middle East. It does not have experience of liquefied natural gas (LNG) operatorship. The deal would allow Occidental to achieve between 60-90% of its US$10 billion to US$15 billion disposal target in one swoop.

He added: “The US$8.8 billion deal is very sellable to Total’s shareholders. The transaction plays to Total’s strengths in deepwater and LNG; bolsters the company’s core Africa holdings, and adds material volumes with long-term growth potential.

“Total would gain material oil, LNG and exploration holdings. In oil, Total will consolidate its position in Algeria’s Hassi Berkine oil field and add a new deepwater oil position in Ghana.

“Total will also grow its gas business, a core long-term objective for the company. Anadarko’s Area 1 LNG project in Mozambique did not sit naturally in Oxy’s portfolio. But it provides Total with a new greenfield LNG development for which sanction is imminent. The project has the potential for multiple brownfield expansions. The deal also includes exploration acreage in South Africa close to Total’s recent Brulpadda gas discovery.”

Chevron gets $1B breakoff fee if deal terminated

In a statement on Tuesday deeming Oxy’s revised offer a superior one, Anadarko said Oxy had obtained committed financing for the entire cash portion of the aggregate transaction consideration, and completion of the transaction will not require or be conditioned upon the receipt of any vote or other approval by Occidental’s stockholders.

“Anadarko has notified Chevron that Anadarko’s board of directors has unanimously determined that the Revised Occidental Proposal constitutes a “Superior Proposal” and after complying with its obligations to Chevron under the Chevron Merger Agreement, Anadarko intends to terminate the Chevron Merger Agreement in order to enter into a definitive merger agreement with Occidental in connection with the Revised Occidental Proposal.”

Under the agreement with Anadarko, Chevron has the right, during the four business day period ending on May 10, 2019, which may be extended, to propose revisions to the terms of the Chevron Merger Agreement, or to make another proposal.

“Anadarko is required to, and will, make its representatives reasonably available to negotiate with Chevron during this period with respect to such proposed revisions or other proposal, if any.
If Anadarko terminates the Chevron Merger Agreement in order to enter into a definitive agreement with respect to the Revised Occidental Proposal, Anadarko will pay Chevron a $1 billion termination fee as required by the Chevron Merger Agreement,” Anadarko said.

Commenting on Anadarko’s notification of the intention to proceed with Oxy, Chevron said: “We acknowledge receipt of Anadarko’s notification, and we have no further comment at this time.”

Offshore Energy Today Staff

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