Chevron Kept Rejecting Anadarko's Push to Raise Its Takeover Bid

Tina Davis

09 Jun 2019, 02:21 PM IST

(Bloomberg) -- Chevron Corp. just kept saying no.

The oil major was asked multiple times to raise its bid for Anadarko Petroleum Corp. and, after boosting it by $1 a share early on, Chevron wouldn’t be moved.

In comparison, Occidental Petroleum Corp. -- which last month won the takeover battle for Anadarko with a $38 billion bid -- revised its own proposal numerous times over the course of its two-year effort, including a last-minute drop in price that was quickly scratched the morning before an agreement between Anadarko and Chevron was signed.

The details are laid out in a filing Friday with the U.S. Securities and Exchange Commission. The takeover was a rare example of a public bidding war involving large oil companies. Ultimately, Chevron’s decision not to raise its offer in response to Occidental is what cleared the way for the biggest acquisition of an oil producer in four years.

Chevron’s Hard No

Chevron initially proposed $64 a share in February, a 31% premium to Anadarko’s Feb. 5 closing price.
A month later, Chevron CEO Mike Wirth agreed to boost the deal by $1. A few days later, they were informed that Occidental was also bidding, but the company “confirmed its proposed purchase price of $65 a share.”
On March 24, Wirth reiterated that he wouldn’t raise the bid.
On April 5, Chevron told Anadarko that it would not engage in a bidding war if the company entered into a definitive merger agreement with another suitor.
On April 7, a Chevron executive said the company “remained firm at a purchase price of $65 per share.”
On April 10, a day before it signed the merger agreement with Anadarko, Chevron again said it would not be moved above $65.

Occidental’s much longer effort to acquire Anadarko began in July 2017 when CEO Vicki Hollub reached out to express interest. A few months later, the company sent a formal letter offering $61.22 a share, a 23% premium at the time.

Anadarko CEO Al Walker rejected that bid, citing “concerns with the proposed operating model, the supportability of the combined company’s pro forma dividend policy, and execution and integration challenges in the proposed combination,” according to the filing.

Undeterred, Hollub would make a $76 per share offer in January 2018, which was also rejected -- but the Anadarko board suggested it would be amenable to an all-cash deal. Hollub continued to pursue a deal in 2018, meeting with Walker at various industry trade events to discuss the combination.

In March of this year, while Anadarko was in talks with Chevron, Hollub came back with her $76-a-share bid.

A month later, Hollub reduced her offer price to $72, but boosted the cash portion. Three days after that, on April 11, she changed her mind and reverted back to $76, with 40% cash and the offer of board seats for Walker and two other Anadarko directors. By that evening, however, Anadarko signed its deal with Chevron.

In the end, Anadarko would pay a $1 billion termination fee to end that deal in favor of Occidental’s proposal.

To contact the reporter on this story: Tina Davis in New York at tinadavis@bloomberg.net

To contact the editors responsible for this story: Tina Davis at tinadavis@bloomberg.net, Simon Casey, Mike Jeffers