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Berkshire Hathaway supported Occidental Petroleum's ambitious bid to acquire $ 55 billion from rival Anadarko Petroleum, promising to invest $ 10 billion to fund the operation, a rare Warren Buffett initiative in independent production. shale.
Berkshire said that if the takeover materializes, it would invest $ 10 billion in new Western preferred shares that will pay a dividend of 8% and a warrant to buy up to $ 80 million. Ordinary shares, or about 11% of its own funds.
Mr. Buffett's commitment was unexpected, as he generally kept clear of the companies that led the shale revolution. This agreement would make Occidental the third largest oil company in the United States and strengthen its already strong position in the Permian Basin in Texas and New Mexico, at the heart of the shale oil boom.
Vicki Hollub, CEO of Occidental, said in a statement that the company was "delighted" to get Berkshire's support for its offer. Rumors that Mr Buffett would get involved would get worse after the West's West Spray was sighted in his home town of Omaha, Nebraska, on Sunday.
"We think for a long time that Occidental is uniquely positioned to generate attractive value from Anadarko's highly complementary badet portfolio," Ms. Hollub said. "We look forward to working with the Anadarko Board of Directors to deliver this superior transaction to our respective shareholders."
However, worries about the cost of financing drove down Western equities by around 2 percent to $ 58.83 early in the afternoon in New York.
Anadarko is on the verge of accepting Occidental's offer, which has canceled its previously agreed $ 50 billion sale to Chevron. At Tuesday's prices, Western's 50/50 bid was worth about $ 74 per Anadarko share, while Chevron's was only $ 63, with a lower cash component.
Anadarko said on Monday that its board had "unanimously decided" that Western's offer would likely be deemed superior to the Chevron deal.
However, its offering has raised concerns about the impact on the company's borrowings, both to finance its offering and to take over Anadarko's debt.
Fully funded by the debt, the deal would leave the merged group with a net debt of approximately $ 42 billion, more than three times its cash flow from operations, according to Jason Gammel, an badyst at Jefferies.
Moody's, the rating agency, announced last week that it was considering upgrading Occidental from A3 to "a weakly positioned investment grade rating" if the acquisition was successful.
The 8% dividend that Berkshire will receive on preferred shares is like expensive financing compared to Western's 10-year bonds, which yield about 3.4%.
The purchase price of Occidental shares is set at $ 62.50, which means it would be in the money after a modest rise in shares compared to their level on Tuesday.
Matthew Portillo, an badyst at investment bank Tudor Pickering Holt, said he had been "lukewarm" about the prospect of the acquisition of Anadarko, which would have had a positive effect on earnings and flows. Western cash, even before the announcement of the financing.
The cost of the preferred shares, he warned, "could partially affect the accumulation of free cash flow resulting from the transaction".
He added that if Chevron returned with an offer of about 73 dollars a share, he would probably be able to take control of Anadarko because it could be a better argument for synergies and would present a balance sheet. more solid.
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