U.S. oil firm Anadarko Petroleum intends to resume negotiations with Occidental Petroleum (Oxy) in response to Occidental’s proposal to acquire the company. Anadarko says that Oxy’s bid could result in a “superior proposal” to that made by Chevron.
As previously reported, Anadarko entered into a definitive merger agreement with Chevron Corporation on April 11, 2019. Chevron offered to acquire all of the outstanding shares of Anadarko in a stock and cash transaction valued at $33 billion, or $65 per share.
Based on Chevron’s closing price on April 11, 2019, and under the terms of the agreement, Anadarko shareholders would receive 0.3869 shares of Chevron and $16.25 in cash for each Anadarko share. The total enterprise value of the transaction was estimated to be $50 billion.
However, less than two weeks after Anadarko and Chevron announced their deal, U.S. oil firm Occidental Petroleum entered into a race with Chevron to buy Anadarko Petroleum. Oxy’s 50-50 cash and stock transaction was valued at $57 billion. Following Oxy’s bid, Anadarko said it would carefully review it.
Oxy’s bid could result in “superior proposal”
Anadarko said on Monday that it is resuming its earlier negotiations with Occidental because Anadarko’s board of directors, following consultation with its financial and legal advisors, has unanimously determined that the Occidental proposal could reasonably be expected to result in a “Superior Proposal” as defined in the Chevron merger agreement.
According to Anadarko, the Occidental proposal reflects significant improvement with respect to indicative value, terms and conditions, and closing certainty as compared to any previous proposal Occidental made to Anadarko.
Under the Occidental proposal, Occidental would acquire Anadarko in a transaction with consideration comprised of $38.00 in cash and 0.6094 of a share of Occidental common stock per share of Anadarko common stock.
Under the Chevron merger agreement, Chevron would acquire Anadarko in a transaction with consideration comprised of $16.25 in cash and 0.3869 of a share of Chevron common stock per share of Anadarko common stock.
The Anadarko board’s determination allows Anadarko to resume negotiations with Occidental in accordance with the Chevron merger agreement. The Chevron merger agreement remains in effect and accordingly the Anadarko board reaffirms its existing recommendation of the transaction with Chevron at this time.
“There can be no assurance that negotiations with Occidental will result in a transaction that is superior to the pending transaction with Chevron. Further, the terms of any transaction with Occidental may vary from those reflected in the Occidental Proposal,” Anadarko concluded.
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