Anadarko Petroleum Corp. (NYSE: APC) said Monday morning that it intends to resume negotiations with Occidental Petroleum Corp. (NYSE: OXY) as a result of Oxy’s offer to pay more for the independent exploration and production company than Chevron Corp. (NYSE: CVX) offered two weeks earlier. Including the assumption of Anadarko debt, Oxy has offered to pay around $57 billion, considerably more than the $50 billion offer from Chevron that Anadarko has already accepted.
According to the announcement, the agreement with Chevron “remains in effect and accordingly the Anadarko board reaffirms its existing recommendation of the transaction with Chevron at this time.”
However, Anadarko’s board has “unanimously determined” that Oxy’s offer “could reasonably be expected to result in a ‘Superior Proposal’ as defined in the Chevron Merger Agreement.” Oxy’s proposal, according to Anadarko “reflects a significant improvement” over previous proposals to acquire the company.
Occidental proposes to acquire Anadarko for $38 in cash and 0.6094 of a share of Oxy’s common stock for each share of Anadarko stock. Oxy’s offer amounts to $76 a share, or around $38 billion.
The Chevron deal pays Anadarko shareholders $16.25 in cash and 0.3869 of a share of Chevron stock for each share of Anadarko common stock. Chevron’s offer is valued at $65 a share, or around $33 billion.
Even though Anadarko’s board says it continues to prefer Chevron’s offer, it must consider an offer that is at least 20% more valuable to its shareholders. Dismissing the Oxy offer out of hand opens the Anadarko board to all sorts of legal claims related to its fiduciary responsibilities.
The bonus is that Chevron is highly likely to sweeten its offer, adding more cash and reducing the amount of stock. Analysts at Mizuho told Barron’s that Chevron’s “last and final” bid would likely be around $72 a share.
The Anadarko announcement has sent Oxy shares down about 2.5% in premarket trading Monday to $59.80, in a 52-week range of $56.83 to $87.67. Between last Wednesday, when Oxy announced its offer, and Friday’s close, the company’s share lost $1.05; shares have lost $1.51 this morning. The larger drop this morning likely means that investors are taking the bid more seriously now than they were last week.
Anadarko shares traded down about 0.4% in Monday’s premarket, at $72.50 in a 52-week range of $40.40 to $76.70, while Chevron stock was unchanged at $117.10 in a 52-week range of $100.22 to $131.08.
24/7 Wall St.Want to Retire Early? Start Here (Sponsor)
Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?
Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.
Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.
Have questions about retirement or personal finance? Email us at [email protected]!
By emailing your questions to 24/7 Wall St., you agree to have them published anonymously on a673b.bigscoots-temp.com.
By submitting your story, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
