Occidental Offers To Acquire Anadarko Petroleum In $57 Bln Deal - Quick Facts

(RTTNews) - Occidental Petroleum Corp. (OXY) said Wednesday that it has made a superior proposal in cash and stock to acquire Anadarko Petroleum Corp. (APC) for $76.00 per share. Shares of Anadarko are gaining more than 9 percent in pre-market activity.

The 50-50 cash and stock transaction is valued at $57 billion, based on Occidental's closing price on April 23, 2019, including the assumption of net debt and book value of non-controlling interest.

Under the proposal, Anadarko shareholders would receive $38.00 in cash and 0.6094 shares of Occidental common stock for each share of Anadarko common stock.

Occidental's proposal represents a premium of about 20 percent to the value of Anadarko's pending transaction as of April 23, 2019. In mid-April, Chevron Corp. (CVX) said it would acquire all of the outstanding shares of Anadarko in a stock and cash transaction valued at $33 billion, or $65 per share.

"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," Occidental said in a letter to Anadarko's board of directors.

Occidental said it believes its proposal is superior both financially and strategically for Anadarko's shareholders. The transaction would create a $100 billion plus global energy leader, with more than 1.4 million Boe/d of production.

Occidental expects the proposed transaction to be significantly accretive to its cash flow and free cash flow in year-one, on a per share basis after dividends in 2020 and beyond.

In addition to supporting accelerated dividend growth, Occidental said it expects to be able to opportunistically buy back stock while retiring debt through portfolio optimization and free cash flow.

Occidental has identified $3.5 billion in annual free cash flow improvements that are expected to be fully achieved by 2021, comprised of $2 billion in annual pre-tax run-rate cost synergies, and $1.5 billion of capital reduction, with the potential for further upside.