Anadarko Shareholders Go for Cash in Oxy Buyout

(Photo: Anadarko)
(Photo: Anadarko)

Shareholders of Anadarko Petroleum Corp on Thursday voted overwhelmingly to sell the company for $38 billion to rival Occidental Petroleum Corp, ending a short-lived contest that pitted two of the most storied names in the oil industry against one another.

Occidental in May beat out Chevron Corp to grab a major oil industry prize: Anadarko's nearly quarter million acres in the Permian Basin, the top U.S. shale field, where low-cost output has helped turn the United States into the world’s top oil producer at more than 12 million barrels per day.

Anadarko's shareholders voted 99% in favor of the deal that gives them $72.34 per share based on Wednesday's closing price for Occidental. Occidental said immediately after the vote it had closed the transaction. Its shares were off a fraction at $45.67 in morning trading.

"We begin our work to integrate our two companies and unlock the significant value of this combination for shareholders," Occidental Chief Executive Vicki Hollub said in a statement.

Anadarko shares are up 54% from the day before it disclosed merger talks, while Occidental shares are down 32% since its discussions were revealed.

The market's sour response has dampened enthusiasm for deals. Even with stocks of many shale firms trading at multi-year lows, it may not be enough to spur a buyout spree by the world's largest oil and gas firms, said Artem Abramov, analyst with Rystad Energy.

"Some super-majors might be waiting for even lower pricing," Abramov said.

Hollub has been lining up financing and organizing asset sales to fund the deal while battling activist investor Carl Icahn, who wants to replace four Occidental directors and influence the pace of the company's asset sales.

Hollub avoided her own shareholder vote on the deal by securing a controversial and pricey $10 billion financing agreement with Warren Buffett’s Berkshire Hathaway. Icahn likened the deal to "taking candy from a baby" on Buffett's part.

Occidental this week sold $13 billion in bonds to help fund the Anadarko purchase and has proposed selling Anadarko’s Africa assets to Total SA.

It also formed a drilling partnership with Colombia’s state-run oil company Ecopetrol SA to develop part of its Permian shale field for up to $1.5 billion.

Occidental last week reported a 14% drop in second quarter profit, as costs related to the deal and weaker chemical earnings hit its bottom line. 

(Reporting by Jennifer Hiller; Editing by Marguerita Choy and David Gregorio)

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