Occidental Petroleum Corporation submitted its third proposal on Wednesday to acquire Texas-based Anadarko Petroleum Corporation for $76.00 per share, about 20 percent higher in value than Chevron's accepted offer by Anadarko on April 12.
Thirteen days ago, Chevron entered into a definitive agreement with Anadarko to acquire all of the outstanding shares of the latter in a stock and cash transaction valued at $33 billion, based on $65 per share.
"Based on Chevron’s closing price on April 11th, 2019 and under the terms of the agreement, Anadarko shareholders will receive 0.3869 shares of Chevron and $16.25 in cash for each Anadarko share. The total enterprise value of the transaction is $50 billion," Chevron’s statement read at the time.
According to Occidental's statement, Anadarko shareholders would receive $38.00 in cash and 0.6094 shares of Occidental common stock for each share of Anadarko common stock if they accept Occidental's "superior" proposal.
"Our proposal represents a premium of approximately 20% to the $63.46 per share value of Chevron's offer as of yesterday's [Tuesday] close. The equity component also provides your shareholders an opportunity to continue to participate in the value creation of this exciting combination," read the letter Occidental submitted to Anadarko's Board of Directors, and copied in the statement.
According to the letter, since late March, Occidental has made three acquisition proposals to Anadarko that offered its shareholders "a significant immediate premium as well as participation in value creation post closing".
"Each was significantly higher than the $65 per share transaction you announced on April 12. Our most recent proposal, conveyed in writing on the morning of April 11, followed by a merger agreement we were prepared to sign, was for $76 per share, comprised of 40% cash and 60% stock," the letter read.
"We were surprised and disappointed that your Board did not engage with us on that proposal, or our proposal of April 8, even though both were significantly higher than the price you accepted from Chevron," it added.
Occidental President and CEO Vicki Hollub also said in the letter that it was "unfortunate" that Anadarko agreed to pay a break-up fee of $1 billion, representing approximately $2 per share, "without even picking up the phone to speak to us after we made two proposals during the week of April 8 that were at a significantly higher value to the transaction you were apparently negotiating with Chevron".
"We sincerely hope that you will act now to secure this compelling opportunity for your shareholders without further delay. Our proposal is superior for your shareholders, employees and other stakeholders, and we look forward to concluding the requisite formalities and executing an agreement expeditiously," Hollub’s letter concluded.
According to Chevron's press release, the transaction with Anadarko has been approved by the Boards of Directors of both companies and is expected to close in the second half of the year.
However, the acquisition is subject to Anadarko shareholder approval. It is also subject to regulatory approvals and other customary closing conditions.
By Hale Turkes