Occidental to Sell Anadarko's Africa Assets to Total if It Wraps Deal With Anadarko -- Update
May 05 2019 - 4:03PM
Dow Jones News
By Bradley Olson and Cara Lombardo
Occidental Petroleum Corp. plans to sell Anadarko Petroleum
Corp.'s Africa assets to Total SA if it completes a deal for the
company.
Occidental is in a contest with larger rival Chevron Corp. to
buy Anadarko, with each company bidding in excess of $30 billion.
The announcement Sunday is part of a plan by Occidental to sell
assets to improve its balance sheet if it can complete the
purchase.
The assets, which would sell for $8.8 billion, include
Anadarko's multibillion-dollar Mozambique project and other
developments in Algeria, Ghana and South Africa.
"The $8.8 billion value to be received for Africa represents an
attractive value based on our extensive evaluation over the last 18
months," said Occidental Chief Executive Vicki Hollub.
Occidental previously had disclosed plans for roughly $10
billion to $15 billion in asset sales following a deal for
Anadarko.
"These are world class assets with great upside, and we welcome
the opportunity to leverage our expertise in [liquefied natural
gas] and deepwater developments as well as our long history of
operating in Africa," said Patrick Pouyanné, chairman and CEO of
Total.
The potential transaction with Total marked another step by
Occidental to shore up its bid for Anadarko, after the company last
week received $10 billion in backing for the potential deal from
Warren Buffett's Berkshire Hathaway Inc.
If Occidental's proposed acquisition of Anadarko goes through,
Berkshire will receive 100,000 preferred shares in Occidental that
pay an 8% annual dividend and a warrant to purchase $5 billion in
Occidental common stock.
The Berkshire funds would make it possible for Occidental to
avoid a shareholder vote on the transaction. While Occidental has
signaled that it believes it could win shareholder support, the
company still moved to do the deal in an effort to strengthen its
offer. Anadarko's deal with Chevron doesn't require the approval of
Chevron shareholders.
Spokesmen for Chevron and Anadarko didn't immediately respond to
requests for comment. Chevron previously has said its deal
"provides the best value and the most certainty to Anadarko's
shareholders." Anadarko's board is currently weighing Occidental's
offer.
Some Occidental shareholders have expressed concerns about the
transaction and the potential that they won't have a say on the
deal. T. Rowe Price Group Inc. said last week that the deal would
push Occidental into new business lines and weaken its balance
sheet. The asset manager also signaled that if the transaction
doesn't come up for a vote, T. Rowe will vote against Occidental's
directors at its annual meeting May 10.
Chevron and Occidental have both seen their shares decline as
the push to win Anadarko continues, a factor that has brought down
the value of a potential transaction from either party. Chevron is
down about 7% since April 11, and Occidental is down about 15%
since then.
Occidental's offer is worth almost $6 billion more than
Chevron's as of Friday's closing price. Under the April 12 deal
with Chevron, Anadarko shareholders would receive 0.3869 share of
the San Ramon, Calif., oil giant and $16.25 for each Anadarko
share. That was $65 a share on April 12 but has since fallen to
$61.62 a share for a total value of $30.93 billion as of Friday's
close.
For Occidental's proposed transaction, which the Anadarko board
is evaluating, Anadarko shareholders would receive $38 in cash and
0.6094 Occidental share. That was $76 a share on April 24, when
Occidental made its rival offer public. It has since fallen to
$73.71 a share, or about $36.8 billion.
Write to Bradley Olson at Bradley.Olson@wsj.com and Cara
Lombardo at cara.lombardo@wsj.com
(END) Dow Jones Newswires
May 05, 2019 16:48 ET (20:48 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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