Warren Buffett’s Berkshire Hathaway has committed to invest US$10 billion in equity in Occidental Petroleum if Occidental completes its proposed acquisition of Anadarko, Occidental said on Tuesday, a day after Anadarko said that it would resume talks with Occidental despite having agreed to a deal with Chevron.
Contingent upon Occidental completing the acquisition of Anadarko, Berkshire Hathaway will receive 100,000 shares of Cumulative Perpetual Preferred Stock with a liquidation value of US$100,000 per share, together with a warrant to purchase up to 80.0 million shares of Occidental common stock at an exercise price of US$62.50 per share, Occidental said.
“We have long believed that Occidental is uniquely positioned to generate compelling value from Anadarko’s highly complementary asset portfolio. We are thrilled to have Berkshire Hathaway’s financial support of this exciting opportunity,” Occidental’s president and CEO Vicki Hollub said.
On Monday, Anadarko said that it plans to resume negotiations with Occidental after Occidental announced last week a proposal to buy Anadarko at a higher price than Anadarko had agreed in a deal with Chevron announced earlier this month.
While negotiations are being held, the Chevron Merger Agreement “remains in effect and accordingly the Anadarko board reaffirms its existing recommendation of the transaction with Chevron at this time,” Anadarko said yesterday, noting that there is no guarantee that the talks would necessarily result in a superior transaction than the one pending with Chevron.
Chevron said on April 12 that it had entered into a definitive agreement to buy Anadarko in a stock and cash transaction valued at US$33 billion that would boost Chevron’s position in the Permian, the Gulf of Mexico, and in liquefied natural gas (LNG).
On April 24, Occidental Petroleum said that it is proposing to buy Anadarko at a higher price than the one Anadarko had accepted from Chevron, opening a bidding war for one of the U.S. companies with the strongest positions in the Permian.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.