Icahn Is Unlikely to Challenge Occidental-Anadarko Deal

(Bloomberg) -- Activist investor Carl Icahn is unlikely to mount a challenge to Occidental Petroleum Corp.’s $38 billion plan to acquire Anadarko Petroleum Corp., according to people familiar with the matter.

Icahn has built a small stake in Occidental and believes the transaction should be taken to a shareholder vote to adhere to good corporate governance, the people said, asking not to be identified because the matter is private. The billionaire believes that without a counter bid from Chevron Corp. it would be difficult to win the necessary shareholder support to call a special meeting, they said.

A representative for Icahn declined to comment.

Anadarko declared Occidental’s sweetened $38 billion takeover offer superior to the $33 billion deal it announced last month with Chevron. On Thursday, Chevron said it wouldn’t make a counter offer and that it expects its deal to be terminated.

Icahn has a history of inserting himself into complicated merger situations. He’s squared off twice with what is now Dell Technologies Inc., challenging its deal to return to the public market last year after fighting against its original buyout in 2013. He got a price bump both times.

Last year, Icahn and another activist investor stymied Fujifilm Holdings Corp.’s $6.1 billion plan to takeover Xerox Corp.

He built a small position in Occidental after it set off a bidding war for Anadarko, which the company had pursued for almost two years before being outflanked by Chevron. In an effort to bolster its bid, Occidental Chief Executive Officer Vicki Hollub agreed to take on a $10 billion investment from billionaire Warren Buffett.

That financing -- contingent on Occidental reaching a deal -- comes with a hefty price tag, with Buffett to receive 100,000 preferred shares that will accrue dividends of 8% annually. That is a substantial premium to the average 3.8% coupon on about $10.4 billion of Occidental’s outstanding debt, according to data compiled by Bloomberg.

Hollub also agreed to sell Anadarko’s assets in four African nations to Total SA for $8.8 billion, contingent on Occidental acquiring the company.

The moves have already ruffled feathers with one of Occidental’s largest shareholders. T. Rowe Price Group Inc. said this week that it would vote against Occidental’s board at its annual shareholder meeting.

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