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By Jennifer Hiller
HOUSTON (Reuters) – Anadarko Petroleum is taxing itself at an exorbitant price by repeatedly repressing Occidental Petroleum's approaches and offering 100% cash offers.
Last month, Occidental beat Chevron Corp. to win a major award in the oil industry: nearly a quarter of a million acres in the Permian Basin, the main shale deposit in the United States. United, where low-cost production has allowed the United States to become the world's largest oil producer of 12 million barrels a day.
Anadarko's tactics have softened the terms of sale and guaranteed a huge pay day to its executives, Chevron and the transaction consultants, the document showed. Anadarko's CEO, Al Walker, will receive $ 98 million and President Robert Gwin will receive $ 55 million, representing $ 300 million in payments to Anadarko's top six executives.
The investment banks Evercore Group and Goldman Sachs & Co, which represented Anadarko, each received a commission of $ 53 million, revealed the record. Chevron received a dissolution fee of $ 1 billion.
The Anadarko board of directors used the competing offers of the suitors to obtain better terms, according to detailed accounts presented for the first time in the file.
The board urged Occidental to revise an initial all-share offering that was not tax-free, required a shareholder vote and required a change in its charter. These efforts prompted Occidental to seek funding from Berkshire Hathaway Inc., a Warren Buffett billionaire, which eliminated the shareholder vote.
In addition, Anadarko's board of directors urged Chevron to increase its initial offering, with an increase of $ 1 per share to $ 65 per share. It decided to remove the requirement that its own offer be presented to the shareholders of Anadarko in the event of a new transaction.
Occidental CEO Vicki Hollub started pursuing Anadarko in July 2017, and the crash featured an equity swap that valued his rival at $ 61.22 a share. Walker rejected the offer and she sued with a transaction valuing Anadarko at $ 76 the action, revealed the record.
Both negotiations continued until 2018, with increasing frequency after Michael Wirth, Chevron's chairman, approached Anadarko in February, offering to buy him for $ 64 per share in a transaction involving 25% of cash and 75% of shares.
Anadarko's board of directors initially favored Chevron after concluding that Occidental's shares would sell after its bid was issued and that the decline would reduce the value of the deal for Anadarko shareholders. He urged Hollub to put a collar on the stock portion. The board also calculated that Occidental should sell assets to pay off its debts, which would increase the risks to which it would be exposed.
The Anadarko board of directors thought that he would first accept the Western bid, Chevron would go away, but he would accepted the contract with Chevron, "there was a good chance that Occidental would pursue its pursuit" and that "the shareholders of Anadarko would derive a considerable advantage".
Occidental, Anadarko and Chevron have not responded to requests for additional comments.
Western shares have fallen by nearly 28% since its bid on Anadarko went public. It 's traded Friday down 0.9% to 47.84 dollars, a lows of more than ten years, while Anadarko shares have lost a fraction of 70.05 dollars. Chevron shares traded at $ 121.48 on Friday, about the same as they were when they were traded.
Western announced its intention to divest most of the non-schist properties of Anadarko and announced the decision of Total SA, a French company, to acquire African properties producing oil for 8.8 billion of dollars.
The deal provoked the anger of several Western investors and pushed activist Carl Icahn to seek seats on his board, calling the deal "excessively expensive". He also demanded financial records and called on Hollub to speed up asset sales.
With other investors, he criticized the funding deal with Berkshire Hathaway for an 8% dividend on his $ 10 billion investment.
The transaction is to be approved by Anadarko shareholders, who will receive $ 59 in cash and 0.29 Occidental shares for each Anadarko share.
The rating firm Moody's Investors Service estimated that taking over debt and Anadarko's borrowings would add a debt of nearly $ 40 billion to Occidental. Moody's put the debt rating of the company to the test.
(This story in the 4th paragraph, corrects to show that Evercore and Goldman each received a $ 53 million commission, not that they received a $ 53 million commission.In the 6th paragraph, corrects for to show that the initial offer required a shareholder vote and had to be amended not that the board of directors had pushed Occidental to hold a shareholder vote and eliminate a necessary change in its charter).
(Jennifer Hiller report, edited by Gary McWilliams, Dan Grebler, Steve Orlofsky and Diane Craft)
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