Anadarko Leaning Toward $38 Billion Occidental Bid Over Chevron: Reports

(Bloomberg) -- Anadarko Petroleum Corp. said it will begin talks about a potential $38 billion takeover by Occidental Petroleum Corp., a move that threatens to scupper a previously agreed deal with Chevron Corp.

Anadarko said Monday in a statement that the Occidental bid is a "superior proposal." It added that an earlier agreement to merge with Chevron remains in effect.

Key Takeaways

The tussle for Anadarko has transfixed the oil industry over the past two weeks. A takeout of the company would be the largest deal in the sector in at least four years. Chevron and Occidental are targeting the company to expand their presence in the Permian Basin, the world's largest oil patch.
Occidental went public April 24 with a bid to buy Anadarko for $76 per share in cash and stock. That compares with Chevron's April 12 agreement to buy The Woodlands, Texas-based Anadarko for $65 a share.
That valuation gap has created pressure from investors. New York-based investment firm D.E. Shaw urged the company to run an open sale process, people familiar with the matter said last week.
A deal with Occidental would trigger a $1 billion breakup fee. And although Occidental's offer is higher, the company's smaller size and balance sheet compared with Chevron have raised uncertainty over its ability to complete a deal. Unlike Chevron, Occidental would also have to put the deal to a shareholder vote.
“We believe the market has already priced in a higher bid from Chevron,” Jefferies LLC analysts Jason Gammel and Daniela Almeida wrote in a note. “We don't expect that a sweetened Chevron bid would need to meet Oxy's given the Anadarko board's evident preference for Chevron stock.”