Occidental Delivers Revised Proposal to Acquire Anadarko

Source Press Release
Company Occidental Petroleum CorporationAnadarko Petroleum Corp. 
Tags Corporate Deals, Deals, Pipelines/ tankers/ distribution, LNG & Gas Storage/Processing, Tight Gas & Liquids, Shale Oil, Shale Gas, Wolf Camp, Niobrara, Marcellus, Eagle Ford, Unconventional Resources, Production/Development, Upstream Activities
Date May 05, 2019

$76.00 Per Share Offer – 78% Cash and 22% Stock

Increased Cash Portion of $59 Per Share Provides Significant Immediate Value, Greater ClosingCertainty and Enhanced Accretion

Today, Occidental Petroleum Corporation (“Occidental” or “the Company”) (NYSE: OXY) delivered a letter to the Board of Directors of Anadarko Petroleum Corporation (“Anadarko”) (NYSE: APC) setting forth the terms of a revised and significantly enhanced superior proposal to acquire Anadarko for $76.00 per share comprised of $59.00 in cash and 0.2934 shares of Occidental common stock per share of Anadarko common stock.

The revised proposal, which has been unanimously approved by the Occidental Board of Directors, represents 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.

On April 29, 2019, Anadarko announced its Board of Directors had 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.

“We firmly believe that Occidental is uniquely positioned to drive significant value and growth from Anadarko’s highly complementary asset portfolio,” said Occidental President and CEO, Vicki Hollub. “This combination will create a global energy leader with the scale and geographic diversification to drive compelling returns to the shareholders of both companies,” she added.

“The financial support of Berkshire Hathaway as well as the agreement we announced with Total allows us to delever our balance sheet while focusing our integration efforts on the assets that will provide the most value for us,” she continued.

Agreement to Sell Anadarko Assets to Total

In a separate release issued today, Occidental announced that, in connection with the Company’s proposal to acquire Anadarko, it has entered into a binding agreement to sell Anadarko’s Algeria, Ghana, Mozambique and South Africa assets to Total S.A. (“Total”) (NYSE: TOT) for $8.8 billion. Additional details regarding the agreement are available in that release.

Letter to Anadarko

The following is a copy of the letter that Occidental delivered to Anadarko’s Board of Directors:

Board of Directors 
Anadarko Petroleum Corporation 
c/o H. Paulett Eberhart 
and R. A. Walker

May 5, 2019

Dear Members of the Anadarko Board of Directors:

We are pleased to submit our revised proposal to acquire Anadarko for $76 per share, comprised of $59 in cash and 0.2934 shares of Occidental common stock per Anadarko share. Our Board of Directors has unanimously approved this proposal and we are enclosing the merger agreement, attaching disclosure schedules of Anadarko and Occidental, which we are prepared to sign, together with a copy of our equity commitment from Berkshire Hathaway and our debtcommitment from BofA Merrill Lynch and Citi.

Our revised proposal represents a premium of approximately 23.3% to the $61.62 per share value of Chevron’s offer as of Friday’s market close. The significantly increased cash component provides value and closing certainty and the equity component continues to provide your shareholders an opportunity to participate in the value creation of this exciting combination. Our revised proposal does not require an Occidental shareholder vote, which has been repeatedly cited as the explanation for why you previously chose Chevron’s $65 offer over our $76 offer.

Anadarko announced on April 29 that the Board of Directors of Anadarko had determined that our April 24 proposal of $76 comprised of $38 in cash and 0.6094 shares of Occidental commonstock per Anadarko share, could reasonably be expected to result in a “Superior Proposal” as defined in your agreement with Chevron. We hope that the Board of Directors of Anadarko will promptly declare our revised and significantly enhanced proposal a “Superior Proposal,” so that you can comply with your obligations under your existing merger agreement and expeditiously secure this compelling value for Anadarko shareholders.

Our revised proposal and merger agreement represents our comprehensive response to all points that your counsel has raised with ours over the course of the past week. Your counsel communicated to ours on Thursday evening a request for three board seats on the Occidental board. We believe our revised proposal, which is 78% cash, does not support this and therefore we have not included such a provision. 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.

Our merger agreement does not contain any financing condition or, as noted above, any Occidental shareholder approval condition, and we do not anticipate any delay to completing the regulatory approval process. We would expect to be in a position to close a transaction in the second half of 2019. As you are aware, our financial advisors are BofA Merrill Lynch and Citi, and our legal advisors are Cravath, Swaine & Moore LLP, and we and they are available if you have any questions.

We remain perplexed at your apparent resistance to obtaining far more value for Anadarko shareholders which has been expressed clearly through our interactions over the last week. As you know from our long-standing interest, we firmly believe that Occidental is uniquely positioned to create significant and sustainable growth and value from Anadarko’s asset portfolio. We hope we can execute this merger agreement without delay and proceed to bringing this exciting combination to fruition.

Sincerely,

Vicki Hollub

President and Chief Executive Officer

Occidental Petroleum Corporation

Conference Call

The Company will hold a conference call on Monday, May 6, 2019, at 8 a.m. Eastern/7 a.m. Central. The conference call may be accessed by calling 1-866-871-6512 (international callers dial 1-412-317-5417) or via webcast at oxy.com/investors. A recording of the webcast will be posted on the Investor Relations section of the website within several hours after the call is completed.

Advisors

BofA Merrill Lynch and Citi are acting as Occidental’s financial advisors. Cravath, Swaine & Moore LLP is providing legal counsel to Occidental.

Source: EvaluateEnergy® ©2019 EvaluateEnergy Ltd