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NorthAmOil COMMENTARY NorthAmOil
Occidental closes Anadarko acquisition
Occidental Petroleum has closed its deal to buy Anadarko Petroleum and is now taking its next steps, writes Anna Kachkova
US
WHAT:
Occidental is taking its next steps with Anadarko’s assets.
WHY:
The company has nalised its deal to buy Anadarko for $38bn.
WHAT NEXT:
Occidental will shed some of Anadarko’s assets.
OCCIDENTAL Petroleum closed its acquisition of Anadarko Petroleum last week and is now g- uring out the next steps to take with the latter’s assets. e deal is the biggest transaction this year, at $38bn, or $55bn including the assump- tion of Anadarko’s debt.
The merger generated considerable con- troversy, with Anadarko having pulled out of a previously agreed deal for it to be bought by Chevron a er Occidental made a higher o er. And some Occidental shareholders have been extremely critical of the company for the way it went about securing the deal. Warren Bu et’s Berkshire Hathaway agreed to invest $10bn in Occidental to help the company boost the cash portion of the Anadarko acquisition. But activ- ist investor Carl Icahn – who owned $1.6bn in Occidental shares, or nearly 5% of the company as of May 30 – has described the investment as Bu et taking Occidental’s CEO, Vicki Hollub, “to the cleaners”, and equated it to “taking candy from a baby”.
The day the Anadarko acquisition closed, Icahn described it as one of the worst deals he had ever seen, having previously criticised Occi- dental for structuring it in such a way that share- holders were unable to vote on the transaction. e investor has also launched a proxy ght to replace four directors on Occidental’s board.
While the deal has now gone through, Icahn continues to push for the replacement of the directors, and for a change in the company’s bylaws to provide “basic stockholder rights”. ese would allow shareholders to call special meetings and set record dates for consent solici- tations more easily than they can currently.
Next steps
In the meantime, Occidental – now saddled with $40bn in debt following the acquisition – is g- uring out how to proceed with various Anadarko assets.
“With Anadarko’s world-class asset portfolio now o cially part of Occidental, we begin our work to integrate our two companies and unlock the sig- ni cant value of this combination for shareholders,”
said Hollub in a statement. “We expect to deliver at least $3.5bn annually in cost and capital spend- ing synergies and the focus of our board and management team is on execution to achieve the promise of this exciting combination. We look forward to updating the market on our contin- ued progress in the months ahead.”
Some of Anadarko’s assets are set to be o oaded as the combined company moves for- ward. Occidental has said it anticipates selling $10-15bn worth of assets over the next couple of years, though which assets will be involved remains to be disclosed. Back in May, Occidental reached an agreement to sell Anadarko’s African assets to France’s Total for $8.8bn once its merger was completed. is deal is anticipated to close around 2020, subject to approval by the relevant authorities. is includes Anadarko’s stake in Mozambique’s Area 1, where the company is leading the development of a $20bn, 12.9mn tonne per year (tpy) LNG export project.
Activist investor Carl Icahn is trying to replace four directors on Occidental’s board.
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w w w . N E W S B A S E . c o m Week 32
15•August•2019