The Western key shareholder, T. Rowe Price, opposes the offer on Anadarko

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T. Rowe Price Group
,
one of the biggest shareholders of
Western Oil
,
is opposed to the project of fusion of the energy company with
Anadarko Petroleum
.

The investment firm (symbol: TROWE), which held 21 million shares of Occidental (OXY) at the end of 2018 – a 2.8% stake – also fears that Occidental is seeking to avoid a vote of shareholders on the transaction. The news comes after
Berkshire Hathaway
of the
(BRK.A) on Tuesday announced an agreement to help finance the purchase by investing $ 10 billion in Occidental high-rate preferred shares, raising the dividend yield to 8%.

"We are very concerned about this transaction and do not think it is in the best interest of shareholders," said John Linehan, manager of the T. Rowe Price Equity Income Income Fund. Barron in a telephone interview. T. Rowe's position could signal greater dissatisfaction among West holders with the Anadarko deal.

Occidental is competing with
Chevron

(CVX) to buy Anadarko (APC).

Chevron reached an agreement to buy Anadarko for $ 65 a share, or $ 33 billion, earlier this month. Anadarko then made an unsolicited bid of $ 76 per share, half in shares and half in cash, valued at about $ 38 billion.

The investment in Berkshire, which depends on the successful purchase of Anadarko, has strengthened Western's position and led many people on Wall Street to conclude Tuesday that Western now has the upper hand.

"We have trouble understanding the reason for being in agreement," Linehan said. Barron. "We do not know if this will improve the strategic position of the Occidental."

He explained that T. Rowe is a long-term holder of Occidental and enjoys the company's diverse composition, current strategy and strong balance sheet. "We believe that the agreement with Anadarko presents a significant risk of execution and that it would also significantly increase Occidental's financial debt," Linehan added.

The approval of the current Western offer for Anadarko requires the shareholders' vote of the Anadarko and West holders, while the Chevron offer would only require the support of the Anadarko holders. This is because Occidental would issue more than 20% of its current number of shares in the transaction; the main stock exchanges require the shareholders' vote on these transactions.

It is possible that Occidental uses the proceeds of investment in Berkshire to raise the cash component of its bid on Anadarko, thus allowing it to avoid shareholder voting. Investors feared that the Western bid would be conditional on a vote of Westerners, and that it was structured so that it could move forward without a vote by the West. the West can solve this problem.

"We would have serious concerns if Occidental was trying to avoid a shareholder vote on this," Linehan said. He added that T. Rowe would have no choice but to vote against the board at the next meeting of Western shareholders to report his dissatisfaction.

A Western spokesman declined to comment on the possibility of avoiding a shareholder vote.

"We believe for a long time that Occidental is uniquely positioned to generate attractive value from Anadarko's highly complementary asset portfolio," said Vicki Hollub, CEO of Occidental, in a statement. published Tuesday. The company is pleased to have the support of Berkshire and looks forward to reaching an agreement with the Anadarko Board, "she said.

There have been rumors in recent days about discontent among Western shareholders with the Anadarko deal. T. Rowe's opposition could signal greater dissatisfaction.

Occidental shares closed down $ 1.25 to $ 58.88, a level close to its lowest level in five years. Chevron shares rose from $ 2.34 to $ 120.06 and Anadarko lost 8 cents to $ 72.85.

Write to Andrew Bary at [email protected]