In what has now become a daily update on the bidding war for what would be the oil industry's largest deal of the past few years, Anadarko Petroleum said that it believes that the latest sweetened offer from Occidental is a "superior proposal" than the merger deal it signed with Chevron in early April.
Over the weekend, Occidental sent a revised proposal to Anadarko, sweetening the proposed deal by lifting the cash component of the purchase price to $59.00 per share plus 0.2934 shares of Occidental common stock per share of Anadarko common stock. This means that Occidental is offering to pay 80 percent of the US$38 billion it is offering in cash.
Chevron's proposal is for $16.25 in cash and 0.3869 of a share of Chevron common stock per share of Anadarko's stock.
Early last week, Anadarko said that it plans to resume negotiations with Occidental after Occidental announced on April 24 a proposal to buy Anadarko at a higher price than Anadarko had agreed in a deal with Chevron announced earlier in April.
Occidental has also won the backing of Warren Buffett's Berkshire Hathaway, which has committed to invest US$10 billion in equity in Occidental if Oxy completes its proposed acquisition of Anadarko.
The much higher cash offer in Occidental's latest proposal has had Anadarko's board reconsidering its choice of preferred buyer.
Anadarko said that it had notified Chevron that Anadarko's board of directors unanimously determined that Oxy's latest proposal is "superior" and that it plans to terminate the merger agreement with Chevron.
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Under the merger deal that Chevron and Anadarko signed before Occidental waded into the bidding war, Chevron has the right to "propose revisions to the terms of the Chevron Merger Agreement, or to make another proposal," during the period to May 10, which may be extended in accordance with the Chevron Merger Agreement, Anadarko said.
If Anadarko terminates the deal with Chevron, it will have to pay Chevron a US$1-billion termination fee, as per the agreement.
According to analysts briefed by Bloomberg, Chevron is likely to make a new offer, but it could be forced to at least match Oxy's offer if it wants to have Anadarko's strong asset position 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. More