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Bidding War Heats Up As Anadarko Plans To Negotiate Occidental’s Bid

Anadarko rig

Anadarko Petroleum Corporation said on Monday that it plans to resume negotiations with Occidental Petroleum 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.

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).

Last Wednesday, 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.

Occidental Petroleum sent a letter to Anadarko’s board of directors on April 24, offering “a superior proposal” to buy Anadarko for $76.00 per share, in which Anadarko shareholders would receive $38.00 in cash and 0.6094 shares of Occidental common stock for each share of Anadarko common stock.

The $76.00 per share cash-and-stock proposal from Occidental represents a premium of around 20 percent to the current value of the transaction with Chevron that Anadarko had accepted, Occidental said in a statement.

Today, Anadarko said 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. 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.”

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, noting that there is no guarantee that the talks would necessarily result in a superior transaction than the one pending with Chevron.

By Tsvetana Paraskova for Oilprice.com

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