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Oxy Continues Vying for Anadarko; Tries to Sway Board with New Offer

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   |    Wednesday,April 24,2019

Oxy has upped in ante in the competition regarding the acquisition of Anadarko Petroleum, submitting a better offer than is presented in Anadarko's pending $33B merger deal with Chevron.

In a letter sent to Anadarko's board of directors, Oxy offers to acquire Anadarko for $76.00 per share, ~20% higher than Chevron's accepted $65/share deal. This would be a total deal value of $38 billion.

The full text of the letter is available below.

Prior to the Anadarko-Chevron deal being struck, Oxy had approached Anadarko with three acquisition proposals, some with far better terms than Chevron offered. According to reports, Anadarko did not accept Oxy's offers due to "structural issues" with their offer.

Anadarko acknowledged that it received the offer in a press release.

It stated: "Anadarko's board of directors will carefully review Occidental's proposal to determine the course of action that it believes is in the best interest of the Company's stockholders."

In its press release, Oxy CEO Vicki Hollub noted that the company had been "focused on Anadarko for several years."

• Hollub commented: "We have been focused on Anadarko for several years because we have long believed that we are ideally positioned to generate compelling value from a combination with them. We look forward to engaging immediately with Anadarko's Board and stakeholders to deliver this superior transaction. Occidental is a leader in using technological innovation to create value, and we will deploy our expertise to enhance the performance and productivity of Anadarko's assets not only in the Permian, but globally. Occidental and Anadarko have a highly complementary asset portfolio, providing us with a unique opportunity to realize significant operating, cost, and capital allocation synergies and achieve near-term cash flow accretion."

Oxy's Letter to Anadarko

April 24, 2019

Dear Members of the Anadarko Board of Directors:

As you know Occidental has long admired Anadarko, and we believe that a combination of our two companies would create a global energy leader with a winning shareholder value proposition. Combining our highly complementary global asset portfolios would generate significant cost and capital synergies, attractive organic growth and a stable, sustainable and growing dividend. The resulting diverse but focused company will be a world leader in shale development and enhanced oil recovery.

Since late March, Occidental has made three acquisition proposals to Anadarko that offered your shareholders a significant immediate premium as well as participation in value creation post closing. Each was significantly higher than the $65 per share transaction you announced on April 12. Our most recent proposal, conveyed in writing on the morning of April 11, followed by a merger agreement we were prepared to sign, was for $76 per share, comprised of 40% cash and 60% stock. We were surprised and disappointed that your Board did not engage with us on that proposal, or our proposal of April 8, even though both were significantly higher than the price you accepted from Chevron.

The transaction you announced with Chevron indicates that the Anadarko Board believes that $65 per share is a fair price for your shareholders. Occidental is hereby proposing to acquire Anadarko for $76 per share, comprised of $38 in cash and 0.6094 shares of Occidental common stock per Anadarko share.

Our proposal represents a premium of approximately 20% to the $63.46 per share value of Chevron's offer as of yesterday's close. The equity component also provides your shareholders an opportunity to continue to participate in the value creation of this exciting combination.

Our Board of Directors has unanimously approved our proposal, and we have executed financing commitments with BofA Merrill Lynch and Citi for the cash portion of our proposal. Our merger agreement will not contain any financing condition, and we do not anticipate any delay to completing the regulatory approval process. We would expect to seek the approval of the shareholders of both companies and close a transaction in the second half of 2019.

It is unfortunate that Anadarko agreed to pay a break up fee of $1 billion, representing approximately $2 per share, without even picking up the phone to speak to us after we made two proposals during the week of April 8 that were at a significantly higher value to the transaction you were apparently negotiating with Chevron.

We noted to you on April 8 that our due diligence is complete. As you are aware, our financial advisors are BofA Merrill Lynch and Citi, and our legal advisors are Cravath, Swaine & Moore LLP, and we and they are available to discuss any aspect of our proposal. We and our advisors have reviewed your merger agreement with Chevron. We are separately sending to you and your legal advisors a form of merger agreement on that basis which we would be prepared to enter into, subject to our agreeing to the disclosure schedules to be attached, together with a copy of our financing commitment letter.

We sincerely hope that you will act now to secure this compelling opportunity for your shareholders without further delay. Our proposal is superior for your shareholders, employees and other stakeholders, and we look forward to concluding the requisite formalities and executing an agreement expeditiously.

Very truly yours,

Vicki Hollub
President and Chief Executive Officer
Occidental Petroleum Corporation