Occidental’s Revised $38 Billion Anadarko Bid Cuts Need for Shareholder Vote

Occidental Petroleum Corp has augmented its bid for Anadarko with a cash component and moved to cut out a requirement that would have seen any deal struck receive approval from its shareholders.

On Sunday, Occidental bid $38 billion for the acquisition of Anadarko Petroleum Corp and the move to amend the bid means that the company’s shareholders opposed to the bid have lost the chance of voting it down.

The move by Occidental means that the company is serious in its bid for Anadarko. However, it opens up room for backlash from major investors like billionaire Carl Icahn. The investor is said to have recently looked to build up his stake in Occidental with a view to amassing enough power to oppose the Anadarko offer.

Occidental’s strategy is to persuade Anadarko into accepting its huge offer, which means the latter would have to ditch a $33 billion sale agreed with Chevron Corp.

At the moment, Anadarko has confirmed receiving the revised bid and currently awaits its board’s decision following a review. However, unless otherwise communicated, the company’s agreement to a merger with Chevron stands.

On Sunday, Occidental reportedly submitted a new proposal in which it offered a revised offer of its $76 per share. The new offer has 78 percent being in cash while 22 percent would be acquired in stock. That deviated from the earlier proposal that had the $76 per share split equally between cash and stock.

The move to have the offer revised significantly lowered the number of Occidental shares needed to finance the bid. With the shares now effectively below the bid’s issuance threshold, there is no need for a vote by the company’s shareholders.

Yesterday, France’s Total SA confirmed that it had an agreement with Occidental regarding the Anadarko’s African assets. The two oil companies have a deal for $8.8 billion for the assets if Occidental and Anadarko merge successfully.

Last Tuesday, Berkshire Hathaway Inc, an investment firm of billionaire investor Warren Buffet, offered Occidental an investment of $10 billion to support the acquisition of Anadarko.

Meantime, if Anadarko declares that Occidental’s bid beat that of Chevron, then the latter will have up to four days in which they would try to match the offer tabled by Occidental. This is as stipulated in the contract terms.

But should Anadarko desert its deal with Chevron, then, it would have to pay $1 billion as a deal severance fee.