Drillinginfo’s Market Intelligence and Market Research product lines have performed in-depth research regarding the valuation and strategic aspects regarding the battle between Chevron and Occidental for the prized Anadarko Petroleum (NYSE: APC). For more detailed information on these aspects, please visit a replay of Drillinginfo’s Webinar held on April 25, 2019, which can be found here:
Depending on the final outcome, the acquisition of Anadarko Petroleum will easily rank within the Top 10 all-time upstream oil and gas deals in history as measured in dollars of the day.
April 12, 2019, Friday morning
- Chevron (NYSE: CVX) and Anadarko announce a definitive agreement executed on April 11, 2019 whereby Chevron would acquire Anadarko
- Offer at announcement is $65/share (25% cash/75% equity) for Anadarko structured as $16.25/share cash and .3869 of Chevron stock.
- Deal value of $50 billion consisting of $33 billion in equity and $17 billion of net Anadarko debt assumed.
- Offer represents a 39% premium to Anadarko prior day stock price
- Merger Agreement includes a $1 billion termination fee to be paid by Anadarko to Chevron. This equates to $2.04 per APC share based on its 1Q 2019 shares outstanding.
- Anadarko closes Friday at $61.78/share – up 32%.
April 24, 2019, Wednesday morning
- Occidental Petroleum (NYSE: OXY) announces a competing offer to buy Anadarko
- Offer at announcement is $76/share (50% cash/50% equity) for Anadarko structured as $38.00/share cash and .6094 per share of Occidental stock.
- Deal value of $57 billion consisting of $40 billion in equity and $17 billion of net Anadarko debt assumed.
- Offers represents a 20% premium to Anadarko’s share price from the prior day ($63.99) and a 62% premium from Anadarko’s share price the day prior to the Chevron offer.
- Anadarko closes Wednesday at $71.40/share – up 12%.
April 24, 2019, Wednesday
- Chevron issues a statement – “We are confident the transaction agreed to by Chevron and Anadarko will be completed.”
April 29, 2019, Monday morning
- Anadarko announces intention to resume negotiations with Occidental.
- Anadarko’s Board of Directors unanimously determined that the Occidental proposal could reasonably be expected to result in a “Superior Proposal” as defined in the Chevron Merger agreement.
- Chevron issues a statement – “We believe our signed agreement with Anadarko provides the best value and most certainty to Anadarko’s shareholders.”
April 30, 2019, Tuesday morning
- Following reports by Bloomberg of an Oxy jet being in Omaha on Sunday, the dots connect with an official announcement that Warren Buffett’s Berkshire Hathaway commits to a $10 billion preferred equity investment (8% yield plus 80 million warrants to buy Oxy at $62.50/share) contingent on Oxy completing a deal with Anadarko.
While rare, a battle for the acquisition of a large, recognized E&P company is not without precedent. Certainly, within the U.S., the most famous battle began in late 1983 when Pennzoil made an informal but binding contract to acquire Getty Oil in a complex structure that valued Getty at $112.50/share. On January 6, 1984, Texaco announced an offer and Getty agreed to sell at $125/share. The battle famously resulted in a long legal dispute whereby Pennzoil (represented by attorney Joe Jamail) accepted a $3 billion settlement after Texaco filed Ch 11 bankruptcy.
The Scorecard of Offers for Anadarko (per APC share)
|Chevron Offer||April 12, 2019||$65.00||$16.25||0.3869 CVX share||25%/75%|
|Occidental Offer||April 24, 2019||$76.00||$38.00||0.6094 OXY share||50%/50%|
|Occidental Offer||May 5, 2019||$76.00||$59.00||0.2934 OXY share||78%/22%|
The Horserace: Implied Offer Values per APC Share and APC Share Price (as of Market Close)
|April 24||April 25||April 26||April 29||April 30||May 1||May 2|
May 5, 2019, Sunday
- OXY affirms its bid of $76/share and increases cash component from $38 to $59. Deal would not require an OXY shareholder vote.
- OXY also announced a sale of APC’s Africa assets to Total S.A. for $8.8 billion, contingent on completing the APC buy.
- Anadarko states OXY bid under review for a “Superior Proposal” which if invoked allows Chevron four business days to revise its terms for APC.
May 6, 2019, Monday after market close
- Anadarko deems the OXY proposal a “Superior Proposal.”
- Chevron has four business days ending May 10 to submit a revised offer, extendable under defined certain conditions.
May 9, 2019, Thursday pre-market
- Chevron declined to make a counter-proposal for Anadarko stating capital discipline, an advantaged portfolio and a 25% increase in share buyback program to $5 billion per year.
- Chevron closed up 3.1% to $121.19 per share.
- Anadarko closed down 3.3% to $73.39 per share.
- Occidental closed down 6.4% to $56.33 per share.
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This blog was last updated on May 9, 2019.
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